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| Comparative balance sheets for Bayshore Industries, Inc. as of December 31 year 2 and year 1 are presented below. |
| Prepare the cash from operations section of the statement of cash flows using the DIRECT method. |
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| Bayshore Industries, Inc. |
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| Balance Sheets |
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| December 31, Year 2 and Year 1 |
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Year 2 |
Year 1 |
Change |
| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ 216,000 |
$ 144,000 |
$ 72,000 |
| Trade receivables - net |
$3,434,000 |
$1,971,000 |
$1,463,000 |
| Inventory |
$810,000 |
$216,000 |
$594,000 |
| Prepaid expenses |
$18,000 |
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$18,000 |
| Total current assets |
$4,478,000 |
$2,331,000 |
$2,147,000 |
| Property and equipment |
$7,780,000 |
$7,740,000 |
$40,000 |
| Less: accumulated depreciation |
$576,000 |
$455,000 |
$121,000 |
| Property and equipment - net |
$7,204,000 |
$7,285,000 |
-$81,000 |
| Intangibles, less accumulated amortization of $14,400 - |
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| year 2 and $7,200 - year 1 |
$21,600 |
$28,800 |
-$7,200 |
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| Total assets |
$ 11,703,600 |
$ 9,644,800 |
$ 2,058,800 |
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| Liabilities and Stockholders' Equity |
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| Current liabilities |
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| Accounts payable and accrued expenses |
$ 872,600 |
$ 396,800 |
$ 475,800 |
| Line of credit |
$108,000 |
$90,000 |
$18,000 |
| Current portion of long-term debt |
$29,000 |
$27,000 |
$2,000 |
| Total current liabilities |
$1,009,600 |
$513,800 |
$495,800 |
| Long-term debt |
$3,069,000 |
$3,098,000 |
-$29,000 |
| Total liabilities |
$4,078,600 |
$3,611,800 |
$466,800 |
| Stockholders' equity |
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| Common stock |
$9,000 |
$9,000 |
$0 |
| Additional paid-in capital |
$5,400,000 |
$5,400,000 |
$0 |
| Retained earnings |
$2,216,000 |
$624,000 |
$1,592,000 |
| Total stockholders' equity |
$7,625,000 |
$6,033,000 |
$1,592,000 |
| Total liabilities and stockholders' equity |
$ 11,703,600 |
$ 9,644,800 |
$ 2,058,800 |
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| Bayshore Industries, Inc. |
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| Statement of Income and Retained Earnings |
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| For the year ended December 31, Year 2 |
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| Net sales |
$ 19,800,000 |
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| Cost of sales |
$9,000,000 |
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| Gross profit on sales |
$10,800,000 |
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| Operating expenses |
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| Selling expenses |
$3,600,000 |
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| General and administrative expenses |
$4,050,000 |
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| Other operating expenses |
$393,300 |
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| Total operating expenses |
$8,043,300 |
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| Operating income |
$2,756,700 |
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| Other income and expenses |
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| Gain/loss on property and equipment disposals |
$18,000 |
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| Interest income |
$9,000 |
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| Interest expense |
-$252,000 |
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| Other income and expenses - net |
-$225,000 |
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| Income before income taxes |
$2,531,700 |
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| Provision for income taxes |
$759,700 |
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| Net income |
$1,772,000 |
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| Retained earnings - beginning |
$624,000 |
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| Dividends paid |
$180,000 |
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| Retained earnings - ending |
$ 2,216,000 |
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