1. Construct an accrual basis Income Statement

BALANCE SHEET Beginning Ending CASH FLOW Cash 225000 320000 Cash Operating Income 1525000 Accounts Receivable 180000 360000 Borrow on Oper. Loan 200000 Inventories 255000 880000 155000 Supplies 280000 Total Cash Receipts 1725000 Total Current Assets 940000 1715000 Cash Operating Expenses 1369120 46880 Interest Payments Family Living Withdrawals Machinery 880000 1030000 64000 Less: Acc. Depr. -175000 -300000 Payments on Oper. Loan Capital Purchases 150000 Real Estate 980000 980000 Total Assets 2625000 3425000 Total Cash Expenditures 1630000 270000 405000 Accounts Payable Operating Loan 270000 470000 Net Cash Flow 95000 Accrued Expenses 80000 45000 261000 196000 Accrued Interest Payable Current Portion Term Debts 100000 140000 916000 Total Current Liabilities 1321000 Long Term Liabilities 860000 820000 Total Liabilities 1776000 2141000 Net Worth 849000 1284000