Refer PB1-3.

Other cash flow information:

Additional investments by stockholders........................ $ 34,000

Other cash flow information:

Additional investments by stockholders... $ 34,000

Cash paid to purchase equipment... 40,000

Cash paid to suppliers and employees... 1,490,000

Repayments of borrowings... 155,000

Cash received from customers... 1,661,000

Cash received from borrowings... 5,000

Dividends paid in cash... 10,000

Required:

1. Did Cheese Factory's cash balance increase or decrease during the year ended August 31, 2015? Which financial statement shows the reasons for this change?

2. What would Cheese Factory's 2015 net income have been had it given a 5 percent pay increase to all employees on September 1, 2014? Which financial statement did you use to answer this?