Method) Use the following information regarding the Newcastle Corporation to prepare a statement of cash flows using the indirect method: Accounts payable decrease $5,000 Accounts receivable increase 7,000 Wages payable decrease 3,000 Amortization expense 16,000 Cash balance. January 1 30,000 Cash balance, December 31 7,000 Cash paid as dividends 6,000 Cash paid to purchase land Cash paid to retire bonds payable at par 100,000 75,000 Cash received from issuance of common stock 45.000 Cash received from sale of equipment 12,000 Depreciation expense Gain on sale of equipment 39,000 14,000 Inventory increase 13,000 Net income 96,000 Prepaid expenses increase 8,000 Remember to use negative signs with answers when appropriate. NEWCASTLE CORPORATION Statement of Cash Flows For Year Ended December 31 Cash Flow from Operating Activities Net Income Add (deduct) items to convert net income to cash basis Depreciation Amortization Gain on Sale of Equipment Accounts Receivable Increase Inventory Increase Prepaid Expenses Increase Accounts Payable Decrease Wages Payable Decrease Cash Flow Provided by Operating Activities Cash Flow from Investing Activities Sale of Equipment 0. Purchase of Land Cash Used by Investing Activities

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).