Hello,

I need help with this assignment. Must show all calculations as I want to have an understanding of how the problem was solved.

You are the CFO for Tom & Jerrys, Inc. Together with Tom Fheelein and Jerry Rhodeint, the companys two shareholders, you are examining the following statement of cash flows which they prepared for Tom & Jerrys, Inc. for the year ended January 31, 2015.

TOM & JERRYSS, INC. Statement of Cash Flows For the Year Ended January 31, 2015
Sources of cash
From sales of merchandise	$380,000
From sale of capital stock	410,000
From sale of investment (purchased below)	80,000
From depreciation	55,000
From issuance of note for truck	20,000
From interest on investments	6,000
Total sources of cash	951,000
Uses of cash
For purchase of fixtures and equipment	320,000
For merchandise purchased for resale	258,000
For operating expenses (including depreciation)	160,000
For purchase of investment	75,000
For purchase of truck by issuance of note	20,000
For purchase of treasury stock	10,000
For interest on note payable	3,000
Total uses of cash	846,000
Net increase in cash	$105,000

Tom claims that this statement of cash flows is an excellent portrayal of a superb first year with cash increasing $105,000. Jerry replies that it was not a superb first year. Rather, he says, the year was an operating failure as the statement is presented incorrectly and $105,000 is not the actual increase in cash. The cash balance at the beginning of the year was $140,000. Instructions:

Using the data provided, prepare a statement of cash flows using the indirect method. The only noncash item in the income statement is depreciation. The purchase/sale of the investment and any resulting gain/loss are investing (not operating) activities. Hint: You may need to figure out net income for the year.

Who is correct? Tom or Jerry? Why?

Again, please show all calculations.

I will provide positive feedback.

Thanks in advance