Auditing

Apollo Shoes Assignment

Fall 2020

1. Introduction

Apollo Shoes is an audit case designed to introduce you to the entire audit process, from planning the engagement to drafting the final report. You are asked to assume the role of a veteran of two-to-three busy seasons, in-charging for the first time. Communication between you and client personnel and other firm members takes the form of e-mail messages from the engagement partner (Arnold Anderson), the engagement manager (Darlene Wardlaw), an intern (Bradley Crumpler) assigned to do the grunt work, and the director of Apollos internal audit department (Karina Ramirez).

The information is sequential in nature. In other words, you must pay close attention to information disclosed early in the audit (for example, in the Board of Directors minutes) as the information may play a role in subsequent audit work. Similarly, the bank cutoff statement in the cash workpapers and invoices used for valuing inventory may be useful later in the search for unrecorded liabilities. The bank confirmation contains information about long-term liabilities.

Detailed instructions regarding the information needed, as well as audit procedures you need to perform, can be found on Connect. The instructions are outlined in the form of emails from the audit manager.

4) Define what is meant by a relevant assertion. 1) List three relevant facts about Apollo Shoes that you think might have an impact on the financial statement audit. 2) Define what is meant by a significant account or disclosure. 3) Identify at least two significant accounts or disclosures from the financial statements of Apollo Shoes. What makes each item significant?

5) Identify at least one relevant assertion for each of the significant accounts or disclosures previously identified from the financial statements of Apollo Shoes. What makes each assertion relevant?

what information you need?

I uploaded the data.

use the finanical statements to answer the questions.

PBC 2019 Trial Balance Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 Credit $1,987.28 $198 116.52 $0.00 $3.044,958.13 $16,410,902.71 $1.262.819.88 $18,825,205 24 $3,012.000.00 $743.314 38 $200,000.00 $7.406.82 $117.000.00 $623.905.92 $433.217.10 $163,500.00 $572691.08 $53,840.59 $4,633,118.09 $0.00 $29,470.32 $1,318.69 $583.99 $6.033.01 $2.815.47 $1,318.69 $583.99 $10,000,000.00 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payrol Checking Account 10400 Savings Account 11000 Accounts Receivable 11500 Alowance for Doubtful Accounts 12000 Inventory - Spotlight 12300 Reserve for Inventory Obsolescence 14100 Prepaid Insurance 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable Current 14700 Other Current Assets 15000 Land 15100 Buildings and Land Improvements 15200 Machinery, Equipment Office Furniture 17000 Accum. Depreciation 19000 Investments 19900 Other Noncurrent Assets 20000 Accounts Payable 23100 Sales Tax Payable 23200 Wages Payable 23300 FICA Employee Withholding 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable 23700 SUTA Tax Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings 40000 Sales 41000 Sales Returns 42000 Warranty Expense 45000 Income from Investments 46000 Interest Income 50010 Cost of Goods Sold 57500 Freight 60000 Advertising Expense 61000 Auto Expenses 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscelaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 74000 Rent or Lease Expense 77500 Administrative Wages Expense 78000 Interest Expense 78500 Income Tax Expense - Federal 78510 Income Tax Expense - State 80000 Loss on Legal Settlement Single Column format $1.987 28 $198. 116.52 $0.00 $3.044.958.13 $16.410.90271 ($1.262.819.88) $18 825 205 24 ($3,012,000.00 $743.314 38 $200,000.00 $7.40682 $0.00 $0.00 $117.000.00 $623.905.92 5433.217.10 $ 163,500.00) $572691.08 $53.840.59 (54,633. 118.09) $0.00 (529,470.32) (51,318.69) (5583.99) (56.033.01) $0.00 52.815.47) $0.00 ($1,318.69) (5583.90 ($10,000,000.00) $0.00 $0.00 $0.00 $8,105,000.00) (57.423,000.00 (52.219,620.65) (5246,172,918.40 54.497583 20 $1,100.28148 $0.00 $204,302.81) $141.569.221.61 $4.302.951.46 $897.140.01 $206.974 39 $31.212.334.17 $133.000.00 $4.633.383.82 $80.495 32 $3 605,133 96 $1.622.425.99 $853.94265 $61.136.04 $135.642.99 $76,373.78 $128.03321 $17023 27 $1.550.989.06 $3.000.000.00 $2.603.485 87 $16.875,305.98 $875.000.00 $2.365.000.00 $429,000.00 $19.172.000.00 $8,105,000.00 $7.423.000.00 $2.219.620.65 $246, 172,918.44 $4,497.583.20 $1,100.281.48 $0.00 $204 302.81 $141,569.221.61 $4,302.95146 $897.140.01 $208.97439 $31,212,334.17 $133.000.00 $4,633,383.82 $80,495 32 $3,605,133.96 $1.622.425.99 $853,942.65 $61,136.04 $135.642.99 $76,373.78 $128.03321 $17,023.27 $1.550.989.06 $3,000,000.00 $2,603,485.87 $16,875,305.98 $875,000.00 $2.365,000.00 $429,000.00 $19,172,000.00 PRC Apollo Shoes, Inc Preclosing Trial Balance 31-Dec-20 Account ID Account Description Debit Am Chi Amt Single Column format 10100 Cash on Hand 52.27523 10200 Regular Checking Account 5557.125.92 5557,125.92 10300 Payroll Checking Account S00 10400 Savings Account $3,645.999.15 53.545,509.15 11000 Accounts Receivable $51.515.259.95 $51.515.25 11400 Other Receivables $1,250,000.00 $1,250,000.00 11500 Allowance for Doubtful Accounts S1,239,009,75 IS1.299,009,75) 12000 Inventory 567,724527.50 567,724,527.50 12300 Reserve for Inventory Obsolescence $6,000.00 5846 14100 Prepaid Insurance 53.434213.78 14200 Prepaid Rent 50.00 14300 Office Supplies SR 540.00 SX 500.00 14400 Notes Reveable-Current S000 14700 Other Current Assets 0.00 15000 Land $117.00000 $117.000.00 15100 Buildings and and improvements 5674313.92 5674.313.92 15200 Machinery, Equipment Office Furnitu62.929.07.13 $2,929,097,13 17000 Accum. Depreciation $610,000.00 18610,000.00 19000 Investments $1.996.710.30 51.995,720,39 19900 Other Noncurrent Assets 553.40.50 $53,59 20000 Account Payable $1,922,095.91 151,92309591) 23100 Sales Tax Payable 0.00 25200 Wages Payable 00 23300 FICA Employee Withholding 58,410,65 S43965) 23350 Medicare Withholding 511,414.99 15114149 23400 Federal Payroll Taxes Payable $118,086.12 STIR 23500 FUTA Tax Payable 0.00 23600 State Payroll Taxes Payable 555.106.86 (555.1066) 23700 SUTA Tas Payable SO_00 23800 FICA Employer Withholding $8.439.65 15643965) 23000 Medicare Employer Withholding $11.414.99 15114140 24100 Line of Credit $44,403,000.00 (544,000000 24200 Current Portion Long-Term Debt 50.00 24700 Other Current Liabilities SO00 27000 Notes Payable-Noncurrent $12,000,000.00 (S12.000.000 39003 Commen Stock $5,105.000 SK 105.000 39004 Paid in Capital 57.423.000.00 (57.423.000000 39005 Retained amnings 56,590,483.64 156,590.48364) 40000 Sales 5242,713,452. 15343,713.45285) 41000 Sales Returns $11.100 220.89 $11.100.220.59 42000 Warranty Expense $1.158.12.47 SL.158.128.47 45000 Income from Investments 51,436,009.31 151.436.08931) 46000 Interest Income $131,881.46 5131 47000 Miscellaneous Income 52.166,000.00 15.166.000000 50010 Cost of Goods Sold $130.196645.36 $130.196.545.26 57500 Freight 54.24026309 54.340.263.09 60000 Advertising sponse $1.036 X5401 51.036.854.01 61000 Auto Expenses 5210 502.0 $210.502.0 63800 Research and Development S527044 60000 Depreciation Expanse $46,000.00 64500 Warehouse Salaries 54.720,715 56 $4,730,715.56 65000 Property Tax Expomie $99.332.45 5245 66000 Legal and Professional Expense $4.9133445 67000 Det 68000 Insurance Experie 5361092 536,106.92 70000 Maintenance Expertise SUS $12.7 535.502.7 70100 Utilities $137.332.18 $137.132.18 70110 Phone 555000 $52.599.00 70120 Postal $77.0361 577.503.61 71000 Miscellaneous Office $24.912 $24.91.2 72000 Payroll Tax Exp S1.577.8115 $1,577.11.RS 73000 Pension Profit Sharing Plan Ex $3.630.375.80 53.630,375.0 78500 Controllers' Caming Account SH1075.0 10175 70000 Restor Lease Expo $1,20657400 SI 2000 77500 Administrative Wages Expo $16.197.225.43 $16,197,225.43 TH000 st Expense $2.591,736 50 52.591,736.50 78500 Income Tax Expense Federal SR200,000.00 $8.900,000.00 78510 Income Tax En Sue $3.100,000.00 53.100,000.00 5330.119.291.01 $330.119.291.01 CONSOLIDATED STATEMENTS OF INCOME APOLLO SHOES, INC. in thousands (except per share data) For the year ended, December 31, 2019 2018 Net Sales (Note 2) Cost of Sales Gross Profit $240,575 $141,569 $99,006 $236,299 $120,880 $115,419 $71,998 $875 ($19,172) (S204) $61,949 0 0 ($1.210 Selling, General and Administrative Expenses Interest Expense (Note 7) Litigation Expense (Note 10) Other Expense (Income) Earnings from Continuing Operations Before Taxes Income Tax Expense (Note 9) Earnings from Continuing Operations Discontinued Operations, Net of tax benefit Net Income $7,165 $2.794 $4,371 $54,680 $21,634 $33,046 (531,301) $1.745 $4.371 Earnings Per Common Share From Continuing Operations Other Net Income $0.54 (50.00) $0.54 $4.08 ($3.86) $0.22 Weighted shares of common stock outstanding 8.105 8,105 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION APOLLO SHOES, INC. in thousands As of December 31 2019 2018 Assets Cash $3,245 S3,509 Accounts Receivable (Net of Allowances of $1,263 and 210, 15,148 2.738 respectively) (Note 3) Inventory (Note 4) 15.813 13,823 Prepaid Expenses 951 Current Assets $35.157 $20,422 Property, Plant, and Equipment (Note 5) 1,174 300 Less Accumulated Depreciation (164) (31) S1.010 $269 Investments (Note 6) 573 613 Other Assets (Note 6) 54 Total Assets $36.794 S21.304 352 0 S3,556 0 3,556 0 0 Liabilities and Shareholders' Equity Accounts Payable and Accrued Expenses $4,675 Short-Term Liabilities (Note 7) 10.000 Current Liabilities $14,675 Long-Term Debt (Note 7) Total Liabilities $14.675 Common Stock 8,105 Additional Paid-in Capital 7,423 Retained Eamings 6,591 Total Shareholders' Equity $22.119 Total Liabilities and Shareholders' Equity $36.794 The accompanying notes are an integral part of the consolidated financial statements. vii 3.556 8,105 7,743 1.900 $17.748 $21.304 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY APOLLO SHOES, INC. in thousands Shares Other Total 2,873 $5,470 $1,745 232 5,000 $533 Par Value Additional Paid Retained (S1 per share) in Capital Earnings $2,873 $2,122 $475 $1,745 $232 $301 $5,000 $5,000 $8,105 $7,423 $2,220 $4,371 $0 Balance, December 31, 2018 Net Income Exercise of Stock Options Other Balance, December 31, 2018 Net Income Exercise of Stock Options Other Balance, December 31, 2019 $10,000 $17,748 8,105 $4,371 0 SO SO 8,105 $8,105 $7,423 $6,591 $0 S22,119 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS APOLLO SHOES, INC. in thousands For the year ended December 31, 2019 2018 Cash Flows from Operating Activities Net Income $4,371 $1.745 Adjustments to Reconcile Net Income to Net Cash Provided Depreciation and Amortization $133 $26 Changes in Operating Assets and Liabilities Decrease (Increase) in Current Assets Accounts Receivable (512,410) (52,073) Inventory ($1.990) ($11,861) Prepaid Expenses (5599) ($123) Increase (Decrease) in Current Liabilities Accounts Payable and Accrued Expenses $1.119 Total Adjustments ($13.747) (58,527) Net Cash Provided by Operating Activities 189.370 (56.782) Cash Flows from Investing Activities Capital Expenditures ($834) ($255) Purchase of Other Assets (554) Net Cash Provided by Investing Activities ($888) (5255) Cash Flows from Financing Activities Proceeds from the Issuance of Debt $10,000 Proceeds from the Issuance of Common Stock S10.533 Net Cash Provided by Financing Activities $10.000 S10.533 Net Increase (Decrease) in Cash (S264) $3,496 Cash at Beginning of Year $3.509 $13 Cash at End of Year $3.245 $3.509 S5.504 The accompanying notes are an integral part of the consolidated financial statements. PBC 2019 Trial Balance Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 Credit $1,987.28 $198 116.52 $0.00 $3.044,958.13 $16,410,902.71 $1.262.819.88 $18,825,205 24 $3,012.000.00 $743.314 38 $200,000.00 $7.406.82 $117.000.00 $623.905.92 $433.217.10 $163,500.00 $572691.08 $53,840.59 $4,633,118.09 $0.00 $29,470.32 $1,318.69 $583.99 $6.033.01 $2.815.47 $1,318.69 $583.99 $10,000,000.00 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payrol Checking Account 10400 Savings Account 11000 Accounts Receivable 11500 Alowance for Doubtful Accounts 12000 Inventory - Spotlight 12300 Reserve for Inventory Obsolescence 14100 Prepaid Insurance 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable Current 14700 Other Current Assets 15000 Land 15100 Buildings and Land Improvements 15200 Machinery, Equipment Office Furniture 17000 Accum. Depreciation 19000 Investments 19900 Other Noncurrent Assets 20000 Accounts Payable 23100 Sales Tax Payable 23200 Wages Payable 23300 FICA Employee Withholding 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable 23700 SUTA Tax Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings 40000 Sales 41000 Sales Returns 42000 Warranty Expense 45000 Income from Investments 46000 Interest Income 50010 Cost of Goods Sold 57500 Freight 60000 Advertising Expense 61000 Auto Expenses 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscelaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 74000 Rent or Lease Expense 77500 Administrative Wages Expense 78000 Interest Expense 78500 Income Tax Expense - Federal 78510 Income Tax Expense - State 80000 Loss on Legal Settlement Single Column format $1.987 28 $198. 116.52 $0.00 $3.044.958.13 $16.410.90271 ($1.262.819.88) $18 825 205 24 ($3,012,000.00 $743.314 38 $200,000.00 $7.40682 $0.00 $0.00 $117.000.00 $623.905.92 5433.217.10 $ 163,500.00) $572691.08 $53.840.59 (54,633. 118.09) $0.00 (529,470.32) (51,318.69) (5583.99) (56.033.01) $0.00 52.815.47) $0.00 ($1,318.69) (5583.90 ($10,000,000.00) $0.00 $0.00 $0.00 $8,105,000.00) (57.423,000.00 (52.219,620.65) (5246,172,918.40 54.497583 20 $1,100.28148 $0.00 $204,302.81) $141.569.221.61 $4.302.951.46 $897.140.01 $206.974 39 $31.212.334.17 $133.000.00 $4.633.383.82 $80.495 32 $3 605,133 96 $1.622.425.99 $853.94265 $61.136.04 $135.642.99 $76,373.78 $128.03321 $17023 27 $1.550.989.06 $3.000.000.00 $2.603.485 87 $16.875,305.98 $875.000.00 $2.365.000.00 $429,000.00 $19.172.000.00 $8,105,000.00 $7.423.000.00 $2.219.620.65 $246, 172,918.44 $4,497.583.20 $1,100.281.48 $0.00 $204 302.81 $141,569.221.61 $4,302.95146 $897.140.01 $208.97439 $31,212,334.17 $133.000.00 $4,633,383.82 $80,495 32 $3,605,133.96 $1.622.425.99 $853,942.65 $61,136.04 $135.642.99 $76,373.78 $128.03321 $17,023.27 $1.550.989.06 $3,000,000.00 $2,603,485.87 $16,875,305.98 $875,000.00 $2.365,000.00 $429,000.00 $19,172,000.00 PRC Apollo Shoes, Inc Preclosing Trial Balance 31-Dec-20 Account ID Account Description Debit Am Chi Amt Single Column format 10100 Cash on Hand 52.27523 10200 Regular Checking Account 5557.125.92 5557,125.92 10300 Payroll Checking Account S00 10400 Savings Account $3,645.999.15 53.545,509.15 11000 Accounts Receivable $51.515.259.95 $51.515.25 11400 Other Receivables $1,250,000.00 $1,250,000.00 11500 Allowance for Doubtful Accounts S1,239,009,75 IS1.299,009,75) 12000 Inventory 567,724527.50 567,724,527.50 12300 Reserve for Inventory Obsolescence $6,000.00 5846 14100 Prepaid Insurance 53.434213.78 14200 Prepaid Rent 50.00 14300 Office Supplies SR 540.00 SX 500.00 14400 Notes Reveable-Current S000 14700 Other Current Assets 0.00 15000 Land $117.00000 $117.000.00 15100 Buildings and and improvements 5674313.92 5674.313.92 15200 Machinery, Equipment Office Furnitu62.929.07.13 $2,929,097,13 17000 Accum. Depreciation $610,000.00 18610,000.00 19000 Investments $1.996.710.30 51.995,720,39 19900 Other Noncurrent Assets 553.40.50 $53,59 20000 Account Payable $1,922,095.91 151,92309591) 23100 Sales Tax Payable 0.00 25200 Wages Payable 00 23300 FICA Employee Withholding 58,410,65 S43965) 23350 Medicare Withholding 511,414.99 15114149 23400 Federal Payroll Taxes Payable $118,086.12 STIR 23500 FUTA Tax Payable 0.00 23600 State Payroll Taxes Payable 555.106.86 (555.1066) 23700 SUTA Tas Payable SO_00 23800 FICA Employer Withholding $8.439.65 15643965) 23000 Medicare Employer Withholding $11.414.99 15114140 24100 Line of Credit $44,403,000.00 (544,000000 24200 Current Portion Long-Term Debt 50.00 24700 Other Current Liabilities SO00 27000 Notes Payable-Noncurrent $12,000,000.00 (S12.000.000 39003 Commen Stock $5,105.000 SK 105.000 39004 Paid in Capital 57.423.000.00 (57.423.000000 39005 Retained amnings 56,590,483.64 156,590.48364) 40000 Sales 5242,713,452. 15343,713.45285) 41000 Sales Returns $11.100 220.89 $11.100.220.59 42000 Warranty Expense $1.158.12.47 SL.158.128.47 45000 Income from Investments 51,436,009.31 151.436.08931) 46000 Interest Income $131,881.46 5131 47000 Miscellaneous Income 52.166,000.00 15.166.000000 50010 Cost of Goods Sold $130.196645.36 $130.196.545.26 57500 Freight 54.24026309 54.340.263.09 60000 Advertising sponse $1.036 X5401 51.036.854.01 61000 Auto Expenses 5210 502.0 $210.502.0 63800 Research and Development S527044 60000 Depreciation Expanse $46,000.00 64500 Warehouse Salaries 54.720,715 56 $4,730,715.56 65000 Property Tax Expomie $99.332.45 5245 66000 Legal and Professional Expense $4.9133445 67000 Det 68000 Insurance Experie 5361092 536,106.92 70000 Maintenance Expertise SUS $12.7 535.502.7 70100 Utilities $137.332.18 $137.132.18 70110 Phone 555000 $52.599.00 70120 Postal $77.0361 577.503.61 71000 Miscellaneous Office $24.912 $24.91.2 72000 Payroll Tax Exp S1.577.8115 $1,577.11.RS 73000 Pension Profit Sharing Plan Ex $3.630.375.80 53.630,375.0 78500 Controllers' Caming Account SH1075.0 10175 70000 Restor Lease Expo $1,20657400 SI 2000 77500 Administrative Wages Expo $16.197.225.43 $16,197,225.43 TH000 st Expense $2.591,736 50 52.591,736.50 78500 Income Tax Expense Federal SR200,000.00 $8.900,000.00 78510 Income Tax En Sue $3.100,000.00 53.100,000.00 5330.119.291.01 $330.119.291.01 CONSOLIDATED STATEMENTS OF INCOME APOLLO SHOES, INC. in thousands (except per share data) For the year ended, December 31, 2019 2018 Net Sales (Note 2) Cost of Sales Gross Profit $240,575 $141,569 $99,006 $236,299 $120,880 $115,419 $71,998 $875 ($19,172) (S204) $61,949 0 0 ($1.210 Selling, General and Administrative Expenses Interest Expense (Note 7) Litigation Expense (Note 10) Other Expense (Income) Earnings from Continuing Operations Before Taxes Income Tax Expense (Note 9) Earnings from Continuing Operations Discontinued Operations, Net of tax benefit Net Income $7,165 $2.794 $4,371 $54,680 $21,634 $33,046 (531,301) $1.745 $4.371 Earnings Per Common Share From Continuing Operations Other Net Income $0.54 (50.00) $0.54 $4.08 ($3.86) $0.22 Weighted shares of common stock outstanding 8.105 8,105 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION APOLLO SHOES, INC. in thousands As of December 31 2019 2018 Assets Cash $3,245 S3,509 Accounts Receivable (Net of Allowances of $1,263 and 210, 15,148 2.738 respectively) (Note 3) Inventory (Note 4) 15.813 13,823 Prepaid Expenses 951 Current Assets $35.157 $20,422 Property, Plant, and Equipment (Note 5) 1,174 300 Less Accumulated Depreciation (164) (31) S1.010 $269 Investments (Note 6) 573 613 Other Assets (Note 6) 54 Total Assets $36.794 S21.304 352 0 S3,556 0 3,556 0 0 Liabilities and Shareholders' Equity Accounts Payable and Accrued Expenses $4,675 Short-Term Liabilities (Note 7) 10.000 Current Liabilities $14,675 Long-Term Debt (Note 7) Total Liabilities $14.675 Common Stock 8,105 Additional Paid-in Capital 7,423 Retained Eamings 6,591 Total Shareholders' Equity $22.119 Total Liabilities and Shareholders' Equity $36.794 The accompanying notes are an integral part of the consolidated financial statements. vii 3.556 8,105 7,743 1.900 $17.748 $21.304 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY APOLLO SHOES, INC. in thousands Shares Other Total 2,873 $5,470 $1,745 232 5,000 $533 Par Value Additional Paid Retained (S1 per share) in Capital Earnings $2,873 $2,122 $475 $1,745 $232 $301 $5,000 $5,000 $8,105 $7,423 $2,220 $4,371 $0 Balance, December 31, 2018 Net Income Exercise of Stock Options Other Balance, December 31, 2018 Net Income Exercise of Stock Options Other Balance, December 31, 2019 $10,000 $17,748 8,105 $4,371 0 SO SO 8,105 $8,105 $7,423 $6,591 $0 S22,119 The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS APOLLO SHOES, INC. in thousands For the year ended December 31, 2019 2018 Cash Flows from Operating Activities Net Income $4,371 $1.745 Adjustments to Reconcile Net Income to Net Cash Provided Depreciation and Amortization $133 $26 Changes in Operating Assets and Liabilities Decrease (Increase) in Current Assets Accounts Receivable (512,410) (52,073) Inventory ($1.990) ($11,861) Prepaid Expenses (5599) ($123) Increase (Decrease) in Current Liabilities Accounts Payable and Accrued Expenses $1.119 Total Adjustments ($13.747) (58,527) Net Cash Provided by Operating Activities 189.370 (56.782) Cash Flows from Investing Activities Capital Expenditures ($834) ($255) Purchase of Other Assets (554) Net Cash Provided by Investing Activities ($888) (5255) Cash Flows from Financing Activities Proceeds from the Issuance of Debt $10,000 Proceeds from the Issuance of Common Stock S10.533 Net Cash Provided by Financing Activities $10.000 S10.533 Net Increase (Decrease) in Cash (S264) $3,496 Cash at Beginning of Year $3.509 $13 Cash at End of Year $3.245 $3.509 S5.504 The accompanying notes are an integral part of the consolidated financial statements