DECISION MAKING ACROSS THE ORGANIZATION...BYP12-6.Ron Nord and Lisa Smith are examining the following statement of cash flows for Carpino Company for the year ended January 31, 2007.CARPINO COMPANYStatement of Cash FlowsFor the Year Ended January 31, 2007Sources of cashFrom sales of merchandise $380,000From sale of capital stock 420,000From sale of investment (purchased below) 80,000From depreciation 55,000From issuance of note for truck 20,000From interest on investments 6,000Total sources of cash 961,000Uses of cashFor purchase of fixtures and equipment 330,000For merchandise purchased for resale 258,000For operating expenses (including depreciation) 160,000For purchase of investment 75,000For purchase of truck by issuance of note 20,000For purchase of treasury stock 10,000For interest on note payable 3,000Total uses of cash 856,000Net increase in cash $ 105,000Ron claims that Carpino’s statement of cash flows is an excellent portrayal of a superbfirst year with cash increasing $105,000. Lisa replies that it was not a superb first year.Rather, she says, the year was an operating failure, that the statement is presented incorrectly,and that $105,000 is not the actual increase in cash. The cash balance at thebeginning of the year was $140,000.InstructionsWith the class divided into groups, answer the following.(a) Using the data provided, prepare a statement of cash flows in proper form using theindirect method. The only non cash items in the income statement are depreciationand the gain from the sale of the investment.(b) Write a memo to shareholders explaining whether the organization had a performing or underperforming first year.