Refer to PB1-3.
PB1-3
Cheese Factory Incorporated reported the following information for the fiscal year ended
December 31, 2012.

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 December 31, 2012? What is your information source?
2. What would Cheese Factory's 2012 net income have been had it given a 10 percent wage increase to all employees on January 1, 2012? What is your information source?

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Accounts Payable Accounts Receivable Cash (balance on January 1, 2012) Cash (balance on December 31, 2012) Contributed Capital $ 35,000 15,000 75,000 80,000 100,000 10,000 95,000 30,000 415,000 $ 110,000 755,000 50,000 Retained Earnings (beginning) 410,000 1,660,000 25,000 530,000 540,000 170,000 Other Liabilities Property and Equipment Prepaid Rent Sales Revenue General and Administrative Expenses Notes Payable Utilities Expense Wages Expense Wages Payable