For the years ending December 31, 2013 and 2014 2014 2013 ASSETS Current assets: Cash $ 3,939 $ 1,970 Accounts receivable 73,856 60,726 Inventory 65,322 58, 100 Prepaids 1,313 1,641 Total current assets $144,430 $ 122,437 Fixed assets1: Land 16,084 16,084 Building & fixtures $ 79,764 $ 72,543 Less: accum. amortization 20,548 59,216 14,442 58,101 Total net fixed assets 75,300 74,185 Total assets $219,730 $196,622 LIABILITIES & OWNER'S EQUITY Current liabilities: $ 32,760 $ 23,962 Bank indebtedness 40,375 31,840 Accounts payable 73, 135 55,802 Total current liabilities 91,910 95, 193 95, 193 Long-term debt 91,910 Total liabilities 45,627 Owner's equity: 54,685 Owner, capital $196,622 $219,730 Total liabilities and owner's equityApr 30, 2023. Dana Gillett and Julie Harvey prepared this case under the supervision of Elizabeth M.A. Grasby solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, NGG ON1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveypublishing.ca. Our goal is to publish materials of the highest quality; submit any errata to publishcases@ivey.ca. Copyright @ 2006, Richard Ivey School of Business Foundation Version: 2022-03-31 Upon graduation, a young business school student, Mandy Arlington, decided to follow her dream of becoming a clothing designer. After much thought, she decided to design her own line of beachwear to be sold in beach towns across the province of Ontario in Canada. Arlington would design the clothing and have it produced by a local manufacturer. After researching suppliers, manufacturers, vendors and office locations, Arlington's clothing line, The 10 Beach Hut, was launched as a sole proprietorship in January of 2011, in time for the upcoming spring season. Operations started slowly and losses were incurred in the first few years; however, by 2014, sales resulted in a profit as demand grew for The 10 Beach Hut wear. Selected financial statements for 2013 and 2014 are shown in Exhibits 1, 2 and 3. REQUIRED Prepare and analyse a statement of cash flows for The 10 Beach Hut for the year ending December 31, 2014.EXHIBIT 1: STATEMENT OF EARNINGS For the year ending December 31, 2014 Net sales Cost of goods sold $ 296,475 Gross profit 221, 109 75,366 Operating expenses Selling and administration $ 48,384 Amortization 6, 106 Interest 14, 115 68,605 Net income $ 6,761 Additional note regarding 2014 operations: 1. The owner made an additional $5,580 capital investment in October 2014 (see Exhibit 2). EXHIBIT 2: STATEMENT OF CAPITAL For the year ending December 31, 2014 Beginning capital (2013) $ 45,627 6,761 Net income 5,580 Capital investment 57,968 3,283 Less: drawings $ 54,685 Ending capital (2014)