Balance Sheet Current Assets Liabilities Cash $10,000 Accounts payable $12,000 Accounts receivable 15,000 Notes payable 20,000 Inventory 25,000 Bonds payable 50,000 Prepaid expenses 12,000 Total liabilities 62,000 Total current assets 62,000 Capital Assets Shareholders' Equity Plant and equipment 250,000 Common stock 75,000 Less: Accum. amortization 50,000 Retained earnings 105,000 Net plant and equipment 200,000 Total shareholders' equity 180,000 Total liabilities and Total assets $262,000 shareholders' equity $262,000 Sales for the year 20XY were $220,000, with cost of goods sold being 60 percent of sales. Amortization expense was 10 percent of pant and equipment (net) at the beginning of the year. Interest expense for the bonds payable was 8 percent, while interest on the notes payable was 10 percent. These are based on December 31, 20XX, balances. Selling and administrative expenses were $22,000, and the tax rate averaged 18 percent. During the year 20XY, the cash balance and prepaid expenses balance were unchanged. Accounts receivable and inventory each increased by 10 percent, and accounts payable increased by 25 percent. A new machine was purchased on December 31, 20XY, at a cost of $35,000. A cash dividend of $12,800 was paid to common shareholders at the end of 20XY. Also, notes payable increased by $6,000 and bonds payable decreased by $10,000. The common stock account did not change. a. Prepare an income statement for the year 20XY. b. Prepare a balance sheet as of December 31, 20XY. c. Prepare a statement of cash flows for the year ended December 31, 20XY. d. Identify the major accounts contributing to the change in cash position, from the three different components of the cash flow statement. Solution Problem 2-33 Instructions Use the templates below to meet the requirements of the problem. a. Prepare an income statement for the year 20XY. Key Facts: Sales $220,000 Cost of goods sold 60% of sales Amortization expense 10% of plant and equipment (net) Note payable interest 10% Bond payable interest 8% Selling and administrative expense $22,000 Tax rate 18% Cash dividend paid $12,800 Change in cash balance - Change in prepaid expense balance - Increase in accounts receivable 10% Increase in inventory 10% Increase in accounts payable 25% Cost of additional machine $35,000 Increase in notes payable $6,000 Decrease in bonds payable $10,000