ELEGENT PRODUCTS, INC.

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2019

Revenue:

Net sales9,900,000

Interest income370,000

Gain on sales of marketable securities 90,000

Total revenue and gains10,360,000

Costs and expenses:

Cost of goods sold4,960,000

Operating expenses (including depreciation of 800,000)3,940,000

Interest expense270,000

Income tax expense300,000

Loss on sales of plant assets90,000

Total costs, expenses, and losses 9,560,000

Net income800,000

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Changes in the company's balance sheet accounts over the year are summarized as follows:

1.Accounts Receivable decreased by 90,000.

2.Accrued Interest Receivable increased by 20,000.

3.Inventory decreased by 290,000, and Accounts Payable to suppliers of merchandise decreased by 250,000.

4.Short-term prepayments of operating expenses decreased by 22,000, and accrued liabilities for operating expenses increased by 37,000.

5.The liability for Accrued Interest Payable decreased by 19,000 during the year.

6.The liability for Accrued Income Taxes Payable increased by 35,000 during the year.

7.The following schedule summarizes the total debit and credit entries during the year in other balance sheet accounts:

Debit Credit

Entries Entries

Marketable Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 210,000

Notes Receivable (cash loans made to others). . . . . . . . . . 250,000 190,000

Plant Assets (see paragraph 8). . . . . . . . . . . . . . . . . . . . . 3,800,000 360,000

Notes Payable (short-term borrowing). . . . . . . . . . . . . . . . .620,000 740,000

Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,100,000

Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50,000

Additional Paid-in Capital (from issuance of stock) . . . . . . . . . . . . . .840,000

Retained Earnings (see paragraph 9). . . . . . . . . . . . . . . . . 320,000 630,000

8.The 360,000 in credit entries to the Plant Assets account is net of any debits to accumulated depreciation when plant assets were retired. Thus, the 360,000 in credit entries represents the

book value of all plant assets sold or retired during the year.

9.The 320,000 debit to Retained Earnings represents dividends declared and paid during the year. The 630,000 credit entry represents the net income for the year.

10.All investing and financing activities were cash transactions.

11.Cash and cash equivalents amounted to 498,000 at the beginning of the year.

Instructions:

You are to make statement of cash flows for the current year. Cash flows from operating activities are to be determined by the direct method. Place brackets around dollar amounts representing cash outlays. Show separately your computations of the following amounts:

a.Cash received from customers.

b.Interest received.

c.Cash paid to suppliers and employees.

d.Interest paid.

e.Income taxes paid.

f.Proceeds from sales of marketable securities.

g.Proceeds from sales of plant assets.

h.Proceeds from issuing capital stock.