Prepare the cash from operations section of the statement of cash flows using the DIRECT method.Bayshore Industries, Inc.Balance SheetsDecember 31, Year 2 and Year 1Year 2 Year 1 ChangeAssetsCurrent assetsCash and cash equivalents $ 216,000 $ 144,000 $ 72,000Trade receivables ? net 3,434,000 1,971,000 1,463,000Inventory 810,000 216,000 594,000Prepaid expenses 18,000 -- 18,000Total current assets 4,478,000 2,331,000 2,147,000Property and equipment 7,780,000 7,740,000 40,000Less: accumulated depreciation 576,000 455,000 121,000Property and equipment ? net 7,204,000 7,285,000 (81,000)Intangibles, less accumulated amortization of $14,400 ?year 2 and $7,200 ? year 121,60028,800(7,200)Total assets $ 11,703,600 $ 9,644,800 $ 2,058,800Liabilities and Stockholders? EquityCurrent liabilitiesAccounts payable and accrued expenses $ 872,600 $ 396,800 $ 475,800Line of credit 108,000 90,000 18,000Current portion of long-term debt 29,000 27,000 2,000Total current liabilities 1,009,600 513,800 495,800Long-term debt 3,069,000 3,098,000 (29,000)Total liabilities 4,078,600 3,611,800 466,800Stockholders? equityCommon stock 9,000 9,000 0Additional paid-in capital 5,400,000 5,400,000 0Retained earnings 2,216,000 624,000 1,592,000Total stockholders? equity 7,625,000 6,033,000 1,592,000Total liabilities and stockholders? equity $ 11,703,600 $ 9,644,800 $ 2,058,800Bayshore Industries, Inc.Statement of Income and Retained EarningsFor the year ended December 31, Year 2Net sales $ 19,800,000Cost of sales 9,000,000Gross profit on sales 10,800,000Operating expensesSelling expenses 3,600,000General and administrative expenses 4,050,000Other operating expenses 393,300Total operating expenses 8,043,300Operating income 2,756,700Other income and expensesGain/loss on property and equipment disposals 18,000Interest income 9,000Interest expense (252,000)Other income and expenses ? net (225,000)Income before income taxes 2,531,700Provision for income taxes 759,700Net income 1,772,000Retained earnings ? beginning 624,000Dividends paid 180,000Retained earnings ? ending $ 2,216,000
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