The 2011 income statement and the 2011 comparative balance sheet of T-Bar-M Camp, Inc., have just been distributed at a meeting of the camps board of directors. The directors raise a fundamental question: Why is the cash balance so low? This question is especially troublesome since 2011 showed record profits. As the controller of the company, you must answer the question.

T Bar M Camp, Inc.

Income Statement

Year Ended December 31, 2011

(In thousands)___________________________

Revenues:

Sales revenue.............................................$436

Expenses:

Cost of goods sold.....................................$221

Salary expense........................................... 48

Depreciation expense................................. 46

Interest expense......................................... 13

Amortization expense................................ 11

Total expenses........................................... 339

Net income................................................. $ 97

Requirements
1. Prepare a statement of cash flows for 2011 in the format that best shows the relationship between net income and operating cash flow. The company sold no plant assets or long-term investments and issued no notes payable during 2011. There were no noncash investing and financing transactions during the year. Show all amounts in thousands.
2. Answer the board members question: Why is the cash balance so low? Point out the two largest cash payments during 2011. (Challenge)
3. Considering net income and the company’s cash flows during 2011, was it a good year or a bad year? Give yourreasons.

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T-Bar-M Camp, Inc. Comparative Balance Sheets December 31, 2011 and 2010 In thousands) 2011 2010 S 17 S 63 61 181 Accounts receivable, net 194 259 (198) 188 554 Property, plant, and equipment..369 (244) Accumulated depreciation S 616 Liabilities and Owners Equity Accounts payabl Accrued liabilities S 63 S 56 2 Notes payable, long-term.. 179 149 213 S 616 264 61 156 $ 554 Common stock, no par Retained earnings