An accountant employed by Zimmerman Electronics Inc. was reviewing the following balances shown in the company’s ledgers for 2012:

Mortgage ………………………………………. $80,000

Prepaid insurance ………………………………        2,000

Marketable securities …………………………..         5,000

Sales returns ……………………………………       50,000

Cash and cash equivalents ……………………..        5,000

Advertising …………………………………….       50,000

Trade receivables ………………………………       15,000

Gross revenue …………………………………. 650,000

Trade and other payables ………………………       12,000

Buildings (net) ………………………………… 100,000

Cost of sales …………………………………… 300,000

Short-term notes payable ………………………       10,000

Retained earnings

(December 31, 2011) ……………………………     40,000

Finance costs ……………………………………      10,000

Land …………………………………………….      25,000

Office salaries …………………………………..      70,000

Share capital …………………………………….      15,000

Lease ……………………………….……………     20,000

Insurance ………………………………………...     10,000

Depreciation (Administration) …………………..     20,000

Income tax expense ………………………………   10,000

Dividends paid ………………………………….     10,000

Interest income …………………………………      15,000

Inventories ……………………………………..       20,000

Sales salaries ………………………………….. 100,000

1. Prepare the following financial statements:

a. Statement of income

b. Retained earnings (section of the statement of changes in equity)

c. Statement of financial position

2. Calculate the company’s cash flow for the year.