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. . . . . . . . . . Acquired $550,000 by signing a note payable with a local bank Sold 25,000 shares of $22 Common Stock for $1,500,000 Purchased Equipment for $300,000 Purchased Inventory on Account - 25,000 Units at $1.15 per unit Sold 15,000 units at $3.50 on Account COGS for Sales on Account Collect $70,000 on Account Paid $117,250 of Accounts Payable Purchased Inventory on Account - 170,000 Units at $1.50 per unit Sold 175,000 units at $3.50 on Account COGS for Sales on Account Collect $472,500 on Account Decrease Font Size Paid $218,600 of Accounts Payable Purchased Inventory on Account - 275,000 Units at $1.35 per unit Sold 200,000 units at $3.50 on Account COGS for Sales on Account Collect $735,000 on Account Paid $494,150 of Accounts Payable Purchased Inventory on Account - 300,000 Units at $1.15 per unit Paid Sales & Marketing Expenses of $30,000 Paid Operating Expenses of $75,708 Record Wages Payable of $40,000 Paid Product Line Research & Development Expenses of $150,000 Paid Advertising Expenses of $87,500 Made the yearly required payment on the note payable. The note carries a 7% interest rate and requires payments of $50,000 plus interest each December 31. Record Yc 1 Depreciation on Equipment Purchased in Year 2 with Salvage Value of $38,000 & useful life of 7 yrs Declared a $10,000 cash dividend for stockholders Paid a $10,000 cash dividend for stockholders . . . . . . . Income Statement Statement of Cash Flows Account Tities for Retained Eemings Revenue Expense Net Income Type Amount Net Change in Cash Goods Available for Sale Price/ Units Unit Total 14,000 $2.00 $28,000 Cost of Goods Sold Price/ Units Unit Total $ $ Ending Inventory Price/ Units Unit Total 14.000 $2.00 $28.000 Beg Bal Purchases: 25,000 28,000 25,000 10,000 1 1 28,750 11.500 15,000 1 17.250 Total Flexible Budget Actual Year 2 at 390,000 Units Sold Pro-Forma at 415,000 Units Sold Pro-Forma at 440,000 Units Sold Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Sales & Marketing Operating Costs Wages Research & Development Expense Advertising Expense Depreciation Exp Interest Expense Net Income Inventory Production Income Statement Year 2 Sales Revenue Less: Cost of Goods Sold Gross Margin $ Less: Expenses Sales & Marketing Operating Costs 1 Wages 2 Research & Development Expense 3 Advertising Expense 4. Depreciation Expense 5 Interest Expense 6 Total Operating Expenses 7 8 Net Income (Loss) $ $ 9 0 Balance Sheet Year 2 Assets Cash $ . 1 $ 2 3 Total Assets 4 5 Liabilities 6 Accounts Payable 7 8 9 0 Total Liabilities $ $ -2 Stockholders Equity 23 24 25 26 Total Stockholders Equity $ 27 28 $ 29 Total Liabilities and Stockholders Equity 30 31 Statement on Stockholders' Equity Year 2 Beginning Common Stock Plus: common stock issued Plus: additional paid in capital Ending Common Stock $ Beginning Retained Earnings Plus: Net Income Less: Dividends Ending Retained Earnings $ Total Stockholders' Equity $ Statement of Cash Flows Year 2 Cash flows from operating activities Cash receipts from revenue Cash payments for expenses Net cash flow from operating activities $ $ Cash flows from investing activities: Cash payments to purchase equipment $ $ Cash flows from financing activities: Cash receipts from borrowing funds Cash receipts from issuing common stock Cash payments to repay borrowed funds Cash payments for dividends Net cash flow from financing activities $ $ $ Net increase/(decrease) in cash Plus: beginning cash balance Ending cash balance $

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