1) The 2016 comparative income statement and the 2016 comparative balance sheet of AMK, Inc. have just been distributed at a meeting of the companys Board of Directors. The members of the board raise a fundamental question: Why is the cash balance so low? This question is especially hard to understand because 2016 showed record profits. As the controller of the company, you must answer the question.

Requirements:

a) Compute the amount of AMK, Inc. acquisition of plant assets. AMK, Inc. disposed of plant assets at book value. The cost and accumulated depreciation of the disposed asset was $44,400. No cash was received upon disposal.

b) Compute new borrowing or payment of long-term notes payable, with AMK, Inc. having only one long-term note payable transaction during the year.

c) Compute the issuance of common stock with AMK, Inc. having only one common stock transaction during the year.

d) Compute the payment of cash dividends.

e) Using the data above with the included financial statements, prepare the companys statement of cash flows indirect method for the year ended December 31, 2016.

f) Considering net income and the companys cash flows during 2016, was it a good year or a bad year? Give your reasons.

	AMK, Inc.
	Income Statement
	Year Ended December 31, 2016
Financial Statements in U.S. Dollars
Sales Revenue		$		714,000
Cost of Goods Sold				347,000
Gross Profit				367,000
Operating Expenses:
Depreciation Expense	$	52,000
Other Operating Expenses		205,000
Total Operating Expenses				257,000
Net Income			$	110,000

AMK, Inc.

Comparative Balance Sheet

December 31, 2016 and 2015

Financial Statements in U.S. Dollars			2016		2015
	Assets
Current Assets:
Cash	$		19,000	$	18,000
Accounts Receivable			54,000		49,000
Merchandise Inventory			81,000		89,000
Long-Term Assets:
Plants Assets			265,200		219,600
Accumulated Depreciation - Plant Assets			(44,200)		(36,600)
Investments			95,000		77,000
Total Assets		$	470,000	$	416,000
	Liabilities
Current Liabilities:
Accounts Payable	$		73,000	$	72,000
Salaries Payable			2,000		5,000
Long-Term Liabilities:
Notes Payable			59,000		66,000
Total Liabilities			134,000		143,000
	Stockholders' Equity
Common Stock			47,000		34,000
Retained Earnings			289,000		239,000
Total Stockholders' Equity			336,000		273,000
Total Liabilities and Stockholders' Equity		$	470,000	$	416,000