The SCF for Wave Electronics Limited, using the indirect method of presentation for operating activities, is shown below.

Required:
1. Some of the items included in operating activities, above, may be presented in other sections of the SCF. Explain the alternatives open to the company. What alternative is open for dividends paid, now in financing activities?
2. Redraft the SCF, reclassifying all items identified in requirement 1 into sections other than operating activities.
3. Return to the SCF as presented in the question. Redraft the SCF, classifying interest and dividends paid in operating activities.
4. Explain why the presentation prepared in requirement 2 or 3 may bepreferable.

WAVE ELECTRONICS LIMITED Statement of Cash Flows Year ended 31 December 20X2 Operating Activities Net earnings Adjustments: $ 28,200 14,200 16,000 23,500 (6,800) (10,000) 65,100 Depreciation and amortization Income tax expense Interest expense Dividend revenue Gain on sale of investments Changes in working capital: Decrease in inventory Cash paid for income ta:x Cash from operating Sold long-term investment Decrease in accounts receivable Cash paid for interest Cash received from dividend revenue 7,500 18,400 24,000) (11,100) 5,600 $61,500 Investing activities: 45,000 138,400) Purchased fixed assets Cash for investing (93,400) Financing activities: Dividends paid Bonds payable issued (20,000) Cash for financing 40,000 8,100 (1300) 6,800 Net increase in cash during the year Cash balance, beginning of the year Cash balance, end of the year