Problem:
The cash flow data of Greenleaf Company for the year ended December 31, 2004 are as follows:
Cash payment of dividends
$ 50,000
Purchase of land
$ 48,000
Cash payments for interest
$ 20,000
Cash payments for salaries
$ 90,000
Sale of equipment
$ 76,000
Retirement of common stock
$ 50,000
Purchase of equipment
$ 60,000
Cash payment to suppliers
$170,000
Cash collection from customers
$400,000
Cash at beginning of year
$100,000
1. Prepare a statement of cash flows for Greenleaf using the direct method in accordance with SFAS 95.
2. Discuss, from an analyst's viewpoint, the purpose of classifying cash flows into the categories required by SFAS 95.