Using the information on the tab titled "Ace Hardware BS and IS" please use the balance sheet and income statement to calculate the company's cash flow for YEAR 3. Year 2 has been done for you as an example. The last tab, "IS with detail exp" has more detail that might help you. BALANCE SHEET ACE HARDWARE Year 3 Year 2 Year 1 Cash A/R $307,600 $256,400 $163,000 $300,000 $350,000 $200,000 Inventory $450,000 $400,000 $425,000 Total Curr Assets $1,057,600 $1,006,400 $788,000 Gross Fixed Assets $2,300,000 $2,100,000 $2,000,000 Accum Depr $700,000 $600,000 $500,000 Net Fixed Assets $1,600,000 $1,500,000 $1,500,000 TOTAL ASSETS $2,657,600 $2,506,400 $2,288,000 A/P $240,000 $260,000 $250,000 ST Notes $40,000 $40,000 $50,000 Total Current Liab $280,000 $300,000 $300,000 LT Debt $475,000 $500,000 $500,000 Total Debt $755,000 $800,000 $800,000 Owner's Equity Common Stock $800,000 $800,000 $800,000 Retained Earnings $1,102,600 $906,400 $800,000 Total Equity $1,902,600 $1,706,400 $1,600,000 TOTAL LIAB AND OE $2,657,600 $2,506,400 $2,400,000 INCOME STATEMENT ACE HARDWARE For the 12 months Jan 1 - Dec 31 Sales Year 3 $1,400,000 $ Year 2 Year 1 1,555,000 $ 1,500,000 Cost of Goods Sold $ (686,000) $ (775,000) $ (750,000) Gross Profit $ 714,000 $ 780,000 $ 750,000 Operating Expenses $ (224,000) $ (249,000) $ (240,000) Operating Profit $ 490,000 $ 531,000 $ 510,000 Interest Expense $ (38,000) $ (42,000) $ (44,000) Profit Before Taxes $ 452,000 $ 489,000 $ 466,000 Taxes $ (180,800) $ (195,600) $ (186,400) Net Profit $ 271,200 $ 293,400 $ 279,600 Dividends Paid $ 75,000 $ 75,000 $ 75,000 (NOTE: Dividends are not part of the Income Statement. They are provided here to make it easier for you. They are usually found on the Statement of Retained Earnings and in the Notes to the Financial Statements. Cash Flow Statement Cash flows from operating activities Year 2 Year 3 Net income $ 293,400.00 Add back: Depreciation & amortization $ 100,000.00 Add back: Loss on disposal of fixed assets $ Deduct: Gain on disposal of fixed assets $ Add for decreases in current assets: Accounts receivable Inventory $ 25,000.00 Other current assets (other than cash) Deduct for increases in current assets: Accounts receivable $ (150,000.00) Inventory Other current assets (other than cash) Add for increases in current liabilities: $ 10,000.00 Accounts payable Other current liabilities Deduct for decreases in current liabilities: Accounts payable Other current liabilities Cash flows from operating activities $ (10,000.00) $ 268,400.00 Cash flows from Investing activities Add: Proceeds from sale of long-term assets Deduct: Capital expenditures $ (100,000.00) Deduct: Purchase of other long-term assets Cash flows from investing activities $ (100,000.00) Cash flows from financing activities Deduct: Cash dividends $ (75,000.00) Add: Issuance of stock Add: Issuance of long-term debt including bonds Deduct: Repayment of long-term debt Cash flows from financing activities $ (75,000.00) Change in cash and cash equivalents $ 93,400.00 Cash and cash equivalents at beginning of period $ 163,000.00 B Cash and cash equivalents at end of period $ 256,400.00