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Question 3: Construct the financial statement of cash flows. Assume the tax rate is 42.5% and all taxes are current. Interest expense is $5,000. Example Corporation Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flow from Operating Activities Net income Add: depreciation expense Increase in accounts receivable Decrease in inventory Decrease in accounts payable Cash provided (used) in operating activities $23,000 4,000 (6,000) 9,000 (5,000) 25,000 Cash Flow from Investing Activities Capital expenditures Proceeds from sale of property Cash provided (used) by investing activities (28,000) 7,000 (21,000) Cash Flow from Financing Activities Borrowings of long-term debt Cash dividends Purchase of treasury stock Cash provided (used) by financing activities 10,000 (5,000) (8,000) (3,000) Net increase in cash Cash at the beginning of the year 1,000 1,200 Cash at the end of the year $ 2,200 Question 3: Construct the financial statement of cash flows. Assume the tax rate is 42.5% and all taxes are current. Interest expense is $5,000. Example Corporation Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flow from Operating Activities Net income Add: depreciation expense Increase in accounts receivable Decrease in inventory Decrease in accounts payable Cash provided (used) in operating activities $23,000 4,000 (6,000) 9,000 (5,000) 25,000 Cash Flow from Investing Activities Capital expenditures Proceeds from sale of property Cash provided (used) by investing activities (28,000) 7,000 (21,000) Cash Flow from Financing Activities Borrowings of long-term debt Cash dividends Purchase of treasury stock Cash provided (used) by financing activities 10,000 (5,000) (8,000) (3,000) Net increase in cash Cash at the beginning of the year 1,000 1,200 Cash at the end of the year $ 2,200