Using the indirect method, prepare the portions of the Statement of Cash Flows of Bayshore Industries, Inc. shown below for the year ended December 31, Year 2.  Double-click on a shaded cell in the Statement of Cash Flows below and choose an activity name from the dropdown list.  Next to each activity, enter the appropriate value.  Enter negative numbers with a leading minus (-) sign.  Each item in the dropdown list may be used once, more than once, or not at all.  Some of the shaded cells in the table may not be used in the completion of this task. Comparative balance sheets and the statement of income and retained earnings for Bayshore Industries, Inc. are presented below.  Use this information to answer the subsequent questions.

Bayshore Industries, Inc.
BALANCE SHEETS
December 31, Year 2 and Year 1
	Year 2	Year 1	Change
Assets
Current assets
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	0	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—Year 2 and $7,200—Year 1	21,600	28,800	(7,200)
Total assets	$11,703,600	$9,644,800	$2,058,800
Liabilities and Stockholders' Equity
Current liabilities
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
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

 

Bayshore Industries, Inc.
STATEMENT OF INCOME AND RETAINED EARNINGS
For the year ended December 31, Year 2
Net sales	$19,800,000
Cost of sales	9,000,000
Gross profit on sales	10,800,000
Operating expenses
Selling expenses	3,600,000
General and administrative expenses	4,050,000
Other operating expenses	393,300
Total operating expenses	8,043,300
Operating income	2,756,700
Other income and expenses
Gain/loss on property and equipment disposal	18,000
Interest income	9,000
Interest expense	(252,000)
Other income and expenses—net	(225,000)
Income before income taxes	2,531,700
Provision for income taxes	759,700
Net income	1,772,000
Retained earnings—beginning	624,000
Dividends paid	(180,000)
Retained earnings—ending	$2,216,000

 
Additional information on transactions during the year ended December 31, Year 2:

•	All accounts receivable relate to customer sales
•	All accounts payable relate to suppliers
•	All fixed assets were acquired for cash
•	A building with an original cost of $360,000 and accumulated depreciation of $319,500 was sold for $58,500
•	The company had no new long-term debt in Year 2
•	Interest paid in the current year was $250,000
•	Cash paid for income taxes in the current year was $700,000
•	There were no non-cash financing or investing activities during the year

Answer rating: 100% (QA)

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