10. Mars Electronics is a distributor for the Global Electric Company (GEC), a large manufacturer of electrical and electronics products for consumer and institutional markets. Below are the semiannual financial statements of the company for the las year and a half.

A. Prepare Mars Electronics' cash flow statements according to the direct method for the six months ending June 30,2009, December 31, 2009 and June 30, 2010.

B. What accounts for the changes in the firm's cash flows over the three periods?

Income Statement (in thousands)
		6/30/2009	12/31/2009	6/30/2010
	Net Sales	$ 10,655	$ 13,851	$ 11,720
	Cost of goods sold	$ 8,940	$ 11,671	$ 9,834
	Selling, general, admin expense	$ 1,554	$ 1,925	$ 1,677
	Depreciation expense	$ 44	$ 55	$ 76
	Interest expense	$ 62	$ 90	$ 70
	income tax expense	$ 23	$ 44	$ 26
	Earnings after Tax	$ 32	$ 66	$ 37
	Didvidends	$ 5	$ 44	$ 1
	Balance Sheet (in thousands)
		6/30/2009	12/31/2009	6/30/2010
	Cash	$ 160	$ 60	$ 70
	Accounts Rec.	$ 1,953	$ 2,616	$ 2,100
	Inventories	$ 1,986	$ 2,694	$ 2,085
	Prepaid Expenses	$ 80	$ 42	$ 25
	Net Fixed Assets	$ 733	$ 818	$ 830
	Total Assets	$ 4,912	$ 6,230	$ 5,110
	Short term debt	$ 50	$ 880	$ 50
	Accounts Pay	$ 1,450	$ 1,950	$ 1,650
	Accrued Expenses	$ 98	$ 114	$ 138
	Long term debt	$ 800	$ 750	$ 700
	Owners Equity	$ 2,514	$ 2,536	$ 2,572
	Total liabilities and owners Eq.	$ 4,912	$ 6,230	$ 5,110