Upon graduation, a young business school student, Mandy Arlington, decided to follow her dream of becoming...

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Upon graduation, a young business school student, Mandy Arlington, decided to follow her dream of becoming a clothing designer. After much thought, she decided to design her own line of beachwear to be sold in beach towns across the province of Ontario in Canada. Arlington would design the clothing and have it produced by a local manufacturer. After researching suppliers, manufacturers, vendors and office locations, Arlington's clothing line, The 10 Beach Hut, was launched as a sole proprietorship in January of 2011, in time for the upcoming spring season. Operations started slowly and losses were incurred in the first few years; however, by 2014, sales resulted in a profit as demand grew for The 10 Beach Hut wear. Selected financial statements for 2013 and 2014 are shown in Exhibits 1, 2 and 3. REQUIRED Prepare and analyse a statement of cash flows for The 10 Beach Hut for the year ending December 31, 2014. EXHIBIT 1: STATEMENT OF EARNINGS For the year ending December 31, 2014 Net sales Cost of goods sold Gross profit Operating expenses Selling and administration Amortization Interest Net income $ 48,384 6,106 14,115 EXHIBIT 2: STATEMENT OF CAPITAL For the year ending December 31, 2014 Beginning capital (2013) Net income Capital investment Additional note regarding 2014 operations: 1. The owner made an additional $5,580 capital investment in October 2014 (see Exhibit 2). Less: drawings Ending capital (2014) $ 296,475 221,109 75,366 68,605 $6,761 $ 45,627 6,761 5,580 57,968 3,283 $ 54,685 EXHIBIT 1: STATEMENT OF EARNINGS For the year ending December 31, 2014 Net sales Cost of goods sold Gross profit Operating expenses Selling and administration Amortization Interest Net income $ 48,384 6,106 14,115 EXHIBIT 2: STATEMENT OF CAPITAL For the year ending December 31, 2014 Beginning capital (2013) Net income Capital investment Additional note regarding 2014 operations: 1. The owner made an additional $5,580 capital investment in October 2014 (see Exhibit 2). Less: drawings Ending capital (2014) $ 296,475 221,109 75,366 68,605 $6,761 $ 45,627 6,761 5,580 57,968 3,283 $ 54,685 Upon graduation, a young business school student, Mandy Arlington, decided to follow her dream of becoming a clothing designer. After much thought, she decided to design her own line of beachwear to be sold in beach towns across the province of Ontario in Canada. Arlington would design the clothing and have it produced by a local manufacturer. After researching suppliers, manufacturers, vendors and office locations, Arlington's clothing line, The 10 Beach Hut, was launched as a sole proprietorship in January of 2011, in time for the upcoming spring season. Operations started slowly and losses were incurred in the first few years; however, by 2014, sales resulted in a profit as demand grew for The 10 Beach Hut wear. Selected financial statements for 2013 and 2014 are shown in Exhibits 1, 2 and 3. REQUIRED Prepare and analyse a statement of cash flows for The 10 Beach Hut for the year ending December 31, 2014. EXHIBIT 1: STATEMENT OF EARNINGS For the year ending December 31, 2014 Net sales Cost of goods sold Gross profit Operating expenses Selling and administration Amortization Interest Net income $ 48,384 6,106 14,115 EXHIBIT 2: STATEMENT OF CAPITAL For the year ending December 31, 2014 Beginning capital (2013) Net income Capital investment Additional note regarding 2014 operations: 1. The owner made an additional $5,580 capital investment in October 2014 (see Exhibit 2). Less: drawings Ending capital (2014) $ 296,475 221,109 75,366 68,605 $6,761 $ 45,627 6,761 5,580 57,968 3,283 $ 54,685 EXHIBIT 1: STATEMENT OF EARNINGS For the year ending December 31, 2014 Net sales Cost of goods sold Gross profit Operating expenses Selling and administration Amortization Interest Net income $ 48,384 6,106 14,115 EXHIBIT 2: STATEMENT OF CAPITAL For the year ending December 31, 2014 Beginning capital (2013) Net income Capital investment Additional note regarding 2014 operations: 1. The owner made an additional $5,580 capital investment in October 2014 (see Exhibit 2). Less: drawings Ending capital (2014) $ 296,475 221,109 75,366 68,605 $6,761 $ 45,627 6,761 5,580 57,968 3,283 $ 54,685