Sharp Screen Films, Inc., is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:

Additional data:

a. Bought equipment for cash,$48,900

b. Paid $14,700 on the long-term note payable.

c. Issued new shares of stock for $38,050 cash.

d. Dividends of $650 were declared and paid.

e. Other expenses all relate to wages.

f. Accounts payable includes only inventory purchases made on credit.

Required:

1. Prepare the statement of cash flows using the indirect method for the year ended December 31, 2015.

2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash by Sharp Screen Films during 2015.

Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation 2015 $ 73,250 15,250 23,450 209,250 (57,450) 2014 $ 63,500 21,350 18,000 160,350 (45,750) $263,750 $217,450 Accounts payable Wages payable Note payable, long-term Contributed capital Retained earnings Income statement for 2015 Sales Cost of goods sold Depreciation expense Other expenses Net income $ 16,500 2,000 56,300 103,950 85,000 $263,750 $205,000 123,500 11,700 43,000 $ 26,800 $ 19,000 2,700 71,000 65,900 58,850 $217,450