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 Excellent 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 Excellent's cash flows for the year. Discuss each of the categories of cash flows in your response.

Question content area bottom

Part 1

Requirement 1. Prepare the statement of cash flows for

Excellent

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.)

Excellent Digital Services, Inc.

Statement of Cash Flows (Direct Method)

For the Year Ended December 31

Operating Activities:

Cash receipts from customers

Cash dividends received

Net cash provided by (used for) operating activities

Part 2

Investing Activities:

Cash used to purchase plant assets

Proceeds from sale of long-term investment

Proceeds from sale of plant assets

Net cash provided by (used for) investing activities

Part 3

Financing Activities:

Proceeds from sale of long-term investment

Payment of shortterm note payable by issuing common stock

Purchase of equipment by issuing common stock to seller

Cash used to pay dividends

Net cash provided by (used for) financing activities

Part 4

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

Part 5

Noncash investing and financing transactions:

Payment of shortterm note payable by issuing common stock

Purchase of equipment by issuing common stock to seller

Total noncash investing and financing activities

Part 6

Requirement 2. Evaluate

Excellent's

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

good

year from a cash-flow standpoint. Operations

provided

cash, and the company was

able

to issue new stock, which means the stockholders

have

faith in the company.

Part 7

The business

invested heavily

in plant assets and

increased

their debt, which generally bodes

well

for the future.

Data table

a.	Collection of interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$5,400
b.	Cash sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$253,500
c.	Credit sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$676,000
d.	Proceeds from sale of long-term investment. . . . . . . . . . . . . . . . . . .	$12,500
e.	Gain on sale of investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$2,300
f.	Payments to suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$574,500
g.	Cash payments to purchase plant assets. . . . . . . . . . . . . . . . . . . . . .	$52,400
h.	Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$63,100
i.	Salaries expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$77,500
j.	Payment of short-term note payable by issuing common stock. . .	$71,800
k.	Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$566,500
l.	Proceeds from issuance of long-term note payable. . . . . . . . . . . . . .	$24,600
m.	Income tax expense and payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$38,300
n.	Proceeds from issuance of common stock. . . . . . . . . . . . . . . . . . . . .	$24,500
o.	Receipt of cash dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$6,600
p.	Interest revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$5,900
q.	Payment of cash dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$28,100
r.	Collections of accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$574,000
s.	Amortization expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$3,000
t.	Payments on long-term notes payable. . . . . . . . . . . . . . . . . . . . . . . . .	$47,000
u.	Interest expense and payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$12,500
v.	Purchase of equipment by issuing common stock to seller. . . . . . .	$17,400
w.	Payment of salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$74,500
x.	Proceeds from sale of plant assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$24,800
y.	Loss on sale of plant assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$3,600
z.	Cash and cash equivalents balance, beginning of year. . . . . . . . . . .	$25,200