|BYP 14-5 DECISION MAKING ACROSS THE ORGANIZATION |

(a) CARPINO COMPANY Statement of Cash Flows For the Year Ended January 31, 2008

Cash flows from operating activities Net loss $ (30,000 )* Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense $ 55,000 Gain from sale of investment (5,000 ) 50,000 Net cash provided by operating activities 20,000

Cash flows from investing activities Sale of investment 80,000 Purchase of investment (75,000 ) Purchase of fixtures and equipment (330,000 ) Net cash used by investing activities (325,000 )*

Cash flows from financing activities Sale of capital stock 420,000 Purchase of treasury stock (10,000 ) Net cash provided by financing activities 410,000 Net increase in cash 105,000 Cash at beginning of period 140,000 Cash at end of period $245,000

Noncash investing and financing activities Issuance of note for truck $ 20,000

BYP 14-5 (Continued)

*Computation of net income (loss) Sales of merchandise $380,000 Interest revenue 6,000 Gain on sale of investment 5,000 ($80,000 – $75,000) Total revenues and gains 391,000 Merchandise purchased $258,000 Operating expenses 105,000 ($160,000 – $55,000) Depreciation 55,000 Interest expense 3,000 Total expenses 421,000 Net loss $ (30,000 )

(b) From the information given, it appears that from an operating standpoint, Carpino Company did not have a superb first year, having suffered a $30,000 net loss. Lisa is correct; the statement of cash flows is not prepared in correct form. The sources and uses format is no longer the