(L.OBJ. 3) Preparing the Statement of Cash Flows—Indirect method-and evaluating cash flo...

(L.OBJ. 3) Preparing the Statement of Cash Flows—Indirect method-and evaluating cash flows [35—45 min]

The comparative Balance Sheet of Smithson Medical Supply at December 31, 2012, reported the following:

Requirements

1. Prepare the Statement of Cash Flows of Smithson Medical Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.

2. Evaluate Smithson’s cash flows for the year Mention all three categories of cash flows and give the reason for your evaluation.