Answer:
<u>Statement of Cash Flows</u>
Cash flow From Operating Activities
Net income                                                                        $524,580
<em>Adjustment for Non Cash Items :</em>
Depreciation expense - buildings                                      $51,660
Depreciation expense - machinery and equipment        $22,680
Patent amortization                                                              $5,040
<em>Adjustments for Changes in Working Capital Items :</em>
Increase in Accounts receivable                                      -$73,080
Decrease in Inventories                                                    $134,680
Increase in Prepaid expenses                                           -$6,400
Decrease in Accounts payable                                        -$89,600
Net Cash From Investing Activities                                 $569,540
Cash flow From Investing Activities
Buildings                                                                           -$579,600
Net Cash From Investing Activities                                 -$579,600
Cash flow From Financing Activities
Mortgage Note                                                                  $224,000
Dividends Paid                                                                  -$123,480
Net Cash From Financing Activities                                 $100,520
Movement during the year                                                  $82,320
Cash and Cash Equivalents at beginning of the year     $360,920
Cash and Cash Equivalents at end of the year                $443,240
Explanation:
For Determination of Dividends Paid, open a Dividends Paid Account as follows :
Debit:
Cash  (Balancing figure) 123,480
Balance c/d                       32,760
Totals                               156,240
Credit
Balance b/d                      25,200
Dividends Declared         131,040
Totals                               156,240