Granite Surfaces specializes in making granite countertops. A new accounting clerk has compiled the following information to prepare the statement of cash flows for the year ended December 31, 2018. Net income for the year was $114,140. Depreciation expense was $15,300. Equipment was sold for a gain of $16,000. Cash proceeds from the sale were $36,000. Equipment was purchased for $250,000. Dividends of $50,000 were paid. Accounts receivable increased by $31,400. Merchandise inventory decreased by $38,700. Accounts payable increased by $41,100. Notes payable increased by $55,000. Stock was sold for $50,000 (also its book value). Cash balance on January 1, 2018 was $114,800. Cash balance on December 31, 2018 was $117,640.
The statement of cash flows the accounting clerk prepared is shown below.
Statement of cash flows
For the Year Ended December 31, 2018
Cash Flow from Operating Activities
Adjustments to Reconcile Net Income to Net Cash
Provided (used) by Operating Activities
Change in Operating Assets and Liabilities
increase in Accounts Receivable
decrease in Merchandise Inventory
Increase in Accounts Payable
Sale of Equipment
Net Cash provided (used) by Operating Activities
Cash flow from Financing Activities
proceeds from Notes Payable
Net Cash Provided (Used) by Investing Activities
Cash Flow from Financing Activities
Payments of Cash dividend
Proceeds from issuance of Common stock
Net Cash provided (used) by Financing activities
Net increase (decrease) in Cash
Cash at the beginning of the year
Cash at the end of the year
119,040 Identify the problems with the statement of cash flows that the accounting clerk prepared.
Prepare a corrected statement of cash flows.