Stegner Inc. reported net income of $130,000 for the year ended December 31, 2010. The following items were included on Stegner’s balance sheets at December 31, 2010 and 2009: 12/31/10 12/31/09 Cash...

Stegner Inc. reported net income of $130,000 for the year ended December 31, 2010. The following items were included on Stegner’s balance sheets at December 31, 2010 and 2009: 12/31/10 12/31/09 Cash $105,000 $110,000 Accounts receivable 223,000 83,000 Notes receivable 95,000 100,000 Stegner uses the indirect method to prepare its statement of cash fl ows. Stegner does not have any other current assets or current liabilities and did not enter into any investing or fi nancing activities during 2010. Required 1. Prepare Stegner’s 2010 statement of cash fl ows. 2. Draft a brief memo to the owner to explain why cash decreased during a profi table year.