HARRIS, INC.

Statement of Cash Flows

For the Year Ended December 31, 2011

Cash Flows from Operating Activities:

Net income

$ 13,000

Add (deduct) items not affecting cash:

Depreciation expense

29,000

Increase in accounts receivable

(6,000)

Decrease in merchandise inventory.

30,000

Increase in accounts payable

3,000

Net cash provided by operating activities

$ 69,000

Cash Flows from Investing Activities:

Purchase of buildings

(90,000)

Proceeds from sale of land at its cost

7,000

Net cash used by investing activities

$(83,000)

Cash Flows from Financing Activities:

Payment of short-term debt

(4,000)

Payment of notes payable

(9,000)

Proceeds from issuance of long-term debt

15,000

Proceeds from issuance of common stock

8,000

Payment of cash dividends on common stock

(5,000)

Net cash provided by financing activities

$ 5,000

Net decrease in cash for the year

$ (9,000)

HARRIS, INC.

Balance Sheet

At December 31, 2010

Assets

Cash

$ 15,000

Accounts receivable

61,000

Merchandise inventory

76,000

Total current assets.

$152,000

Land

34,000

Buildings

118,000

Less: Accumulated depreciation.

(72,000)

Total land and buildings

$ 80,000

Total assets

$232,000

Liabilities

Accounts payable

$ 58,000

Short-term debt

16,000

Notes payable

33,000

Total current liabilities

$107,000

Long-term debt

50,000

Owners' Equity

Common stock, no par

$ 20,000

Retained earnings

55,000

Total owners' equity

$ 75,000

Total liabilities and owners' equity

$232,000