(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 Morston Medical Supply at December 31, 2012, reported the following:

Morston’s transactions during 2012 included the following:

Requirements

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

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