A comparative balance sheet for Tinker Company containing data for the last two years is as follows:

Tinker Company
Comparative Balance Sheet
	This Year	Last Year
Assets
Current assets:
Cash and cash equivalents	$ 49,000	$ 35,800
Accounts receivable	322,000	338,750
Inventory	320,200	223,500
Prepaid expenses	15,800	9,250
Total current assets	707,000	607,300
Property, plant, and equipment	1,252,500	954,000
Less accumulated depreciation	323,700	292,150
Net property, plant, and equipment	928,800	661,850
Long-term investments	68,350	105,500
Long term notes receivable	73,500	41,750
Total assets	$ 1,777,650	$ 1,416,400
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 456,600	$ 298,500
Accrued liabilities	20,600	33,150
Income taxes payable	84,050	69,800
Total current liabilities	561,250	401,450
Bonds payable	377,500	240,500
Total liabilities	938,750	641,950
Stockholders equity:
Common stock	572,000	513,500
Retained earnings	266,900	260,950
Total stockholders equity	838,900	774,450
Total liabilities and stockholders' equity	1,777,650	1,416,400

The following additional information is available about the companys activities during this year:

a. The company declared and paid a cash dividend this year.

b. Bonds with a principal balance of $203,500 were repaid during this year.

c. Equipment was sold during this year for $41,750. The equipment had cost $92,000 and had $36,200 in accumulated depreciation on the date of sale.

d. Long-term investments were sold during the year for $82,000. These investments had cost $37,150 when purchased several years ago.

e. The company did not collect any of the long-term note receivable.

f. The company did not retire any stock.

The company reported net income this year as follows:

1. Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash outflows as negative amounts.)

2. What problems relating to the companys activities are revealed by the statement of cash flows that you have prepared?

$ 1,770,000 1,097,400 672,600 536,550 136,050 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $44,850 (14,050) 30,800 166,850 53,500 $ 113,350