Presented below are the comparative balance sheets and income statement for Wayfarer Inc., a private company reporting under ASPE. Additional information: 1. Cash dividends of $10,800 were declared on December 30, 2014, payable on January 15, 2012. 2. A long-term debt investment was acquired for cash at a cost of $175,500. 3. Depreciation expense is included in the operating expenses. 4. The company issued 22,500 common shares for cash on March 2, 2014. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment. 5. Equipment that originally cost $45,000 was sold during the year for cash. The equipment had a net book value of $16,200 at the time of sale. 6. The company issued a note payable for $90,000 and repaid $9,000 of it by year end. Instructions Prepare a cash flow statement for the year using the indirect method. TAKING IT FURTHER If a company earns a profit during the year, does that always mean that there has been a net increase in cash from operating activities? Explain.
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