13#3

Digital Services, Inc., has provided the following data from the company's records for the year just ended December 31:

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Requirements

1.	Prepare the statement of cash flows for Dazzling Digital Services, Inc., using the direct method for cash flows from operations. Note that you will need to calculate the ending balance of cash and cash equivalents. Include a schedule of noncash investing and financing activities.
2.	Evaluate Dazzling's cash flows for the year. Discuss each of the categories of cash flows in your response.

Requirement 1. Prepare the statement of cash flows for

Dazzling

Digital Services, Inc., using the direct method for cash flows from operations. Note that you will need to calculate the ending balance of cash and cash equivalents. Include a schedule of noncash investing and financing activities.

Prepare the statement one section at a time. (Use parentheses or a minus sign for numbers to be subtracted or for a net cash outflow.)

Dazzling Digital Services, Inc.
Statement of Cash Flows (Direct Method)
For the Year Ended December 31
	Operating Activities:
	Net cash provided by (used for) operating activities

	Investing Activities:
	Net cash provided by (used for) investing activities

	Financing Activities:
	Net cash provided by (used for) financing activities

	Net increase (decrease) in cash
	Cash, beginning of the year
	Cash, end of the year

	Noncash investing and financing transactions:
	Total noncash investing and financing activities

Requirement 2. Evaluate

Dazzling's

cash flows for the year. Discuss each of the categories of cash flows in your response.The year was a

good

poor

year from a cash-flow standpoint. Operations

did not provide

provided

cash, and the company was

able

unable

to issue new stock, which means the stockholders

do not have

have

faith in the company. The business

did not invest

invested heavily

in plant assets and

increased

reduced

their debt, which generally bodes

poorly

well

for the future.

Data table

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a.	Collection of interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$5,700
b.	Cash sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$254,500
c.	Credit sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$673,000
d.	Proceeds from sale of long-term investment. . . . . . . . . . . . . . . . . . .	$12,100
e.	Gain on sale of investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$2,200
f.	Payments to suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$570,000
g.	Cash payments to purchase plant assets. . . . . . . . . . . . . . . . . . . . . .	$52,500
h.	Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$63,600
i.	Salaries expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$77,200
j.	Payment of short-term note payable by issuing common stock. . .	$71,900
k.	Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$566,500
l.	Proceeds from issuance of long-term note payable. . . . . . . . . . . . . .	$24,800
m.	Income tax expense and payment. . . . . . . . . . . . . . . . . . . . . . . . .	$38,700
n.	Proceeds from issuance of common stock. . . . . . . . . . . . . . . . . . . . .	$22,000
o.	Receipt of cash dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$6,500
p.	Interest revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$5,700
q.	Payment of cash dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$28,800
r.	Collections of accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$572,500
s.	Amortization expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$3,400
t.	Payments on long-term notes payable. . . . . . . . . . . . . . . . . . . . . . . . .	$47,000
u.	Interest expense and payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$12,200
v.	Purchase of equipment by issuing common stock to seller. . . . . .	$17,100
w.	Payment of salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$74,100
x.	Proceeds from sale of plant assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$24,800
y.	Loss on sale of plant assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$3,900
z.	Cash and cash equivalents balance, beginning of year. . . . . . . . .	$25,400