An accountant employed by Zimmerman Electronics Inc. was reviewing the following balances shown in the companys ledgers for 2012: Mortgage $80,000 Prepaid insurance 2,000 Marketable securities 5,000 Sales returns 50,000

Cash and cash equivalents 5,000 Advertising 50,000 Trade receivables 15,000 Gross revenue 650,000 Trade and other payables 12,000 Buildings (net) 100,000 Cost of sales 300,000 Short-term notes payable 10,000 Retained earnings (December 31, 2011) 40,000 Finance costs 10,000 Land 25,000 Offi ce salaries 70,000 Share capital 15,000 Lease 20,000 Insurance 10,000 Depreciation (Administration) 20,000 Income tax expense 10,000 Dividends paid 10,000 Interest income 15,000 Inventories 20,000 Sales salaries 100,000 Questions 1. Prepare the following financial statements: a. Statement of income b. Retained earnings (section of the statement of changes in equity) c. Statement of financial position 2. Calculate the companys cash flow for the year.