Question

The comparative balance sheets of Maynard Movie Theater Company at June ​30, 2018 and 2017​, reported the​ following:

			June 30,
			2018	2017
	Current assets:
	Cash and cash equivalents		$18,700	$15,000
	Accounts receivable		14,600	21,500
	Inventories		63,300	60,800
	Prepaid expenses		17,200	2,800
	Current liabilities:
	Accounts payable		$57,900	$55,900
	Accrued liabilities		36,900	16,900
	Income tax payable		15,100	10,100

Acquisition of land				Proceeds from sale of long-
by issuing note payable		$104,000		term investment. . . . . .			$13,400
Amortization expense. . . . . . . .		4,300		Depreciation expense. . . . . . .			16,000
Payment of cash dividend. . . .		41,000		Cash purchase of building. . .			41,000
Cash purchase of				Net income. . . . . . . . . . . . . . . .			25,000
	equipment. . . . . . . . . . . . .	50,000		Issuance of common
Issuance of long-term note				stock for cash. . . . . . . .			17,000
payable to borrow cash		43,000		Stock dividend. . . . . . . . . . . . .			10,000

1.
Prepare Maynard Movie Theater ​Company's statement of cash flows for the year ended June ​30, 2018​, using the indirect method to report cash flows from operating activities. Report noncash investing and financing activities in an accompanying schedule.
2.
Evaluate Maynard​'s cash flows for the year. Mention all three categories of cash​ flows, and give the rationale for your evaluation.

Requirement 1. Prepare Maynard Movie Theater ​Company's statement of cash flows for the year ended June ​30, 2018​, using the indirect method to report cash flows from operating activities. Report noncash investing and financing activities in an accompanying schedule.
Start by completing the cash flows from operating activities. Then complete the remaining statement of cash flows and the accompanying schedule of noncash investing and financing activities. ​(Use parentheses or a minus sign for numbers to be subtracted and for a net decrease in​ cash.)

Maynard Movie Theater Company
	Statement of Cash Flows (Indirect Method)
	Year Ended June 30, 2018
	Cash flows from operating activities:
	Adjustments to reconcile net income to
	net cash provided by (used for) operating activities:
	Net cash provided by (used for) operating activities

	Cash flows from investing activities:
	Net cash provided by (used for) investing activities

	Cash flows from financing activities:
	Net cash provided by (used for) financing activities

	Net increase (decrease) in cash
	Noncash investing and financing activities:

Requirement 2. Evaluate Maynard​'s cash flows for the year. Mention all three categories of cash​ flows, and give the rationale for your evaluation.
Maynard Movie Theater ​Company's cash flows look
▼
strong
weak
.
▼
Financing activities
Investing activities
Operating activities
are the main source of cash.
Maynard Movie Theater generated a
▼
negative
positive
cash flow from investing activities largely due to the
▼
purchase
sale
of equipment and a building. It generally bodes
▼
poorly
well
for the future when a company invests in new capital assets.
Maynard Movie Theater generated a
▼
negative
positive
cash flow from financing activities. These financing activities indicate that the Maynard Movie Theater
▼
is considered
is not considered
​credit-worthy to be able to issue​ long-term notes. We also see that the company has
▼
insufficient
sufficient
funds to pay cash dividends.

Answer 1

Answer is given below