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Given the following balance sheets and income statement for Crestin International, Inc.: a. Develop a cash flow statement. b. Explain why the cash balance increased

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Given the following balance sheets and income statement for Crestin International, Inc.: a. Develop a cash flow statement. b. Explain why the cash balance increased by $350 when the company generated a net profit of $405. CRESTIN INTERNATIONAL, INC. BALANCE SHEET - 12/31/11 (000'S) Cash $200 Accounts payable Accounts receivable 800 Operating accruals Inventory 250 Debt Fixed assets 1,000 Common stock (Accumulated depr.) 400 Retained earnings Total $1,850 Total $200 300 750 400 200 $1,850 CRESTIN INTERNATIONAL, INC. BALANCE SHEET - 12/31/12 (000'S) Cash $550 Accounts payable Accounts receivable 700 Operating accruals Inventory 150 Debt Fixed assets 1,000 Common stock (Accumulated depr.) 600 Retained earnings Total $1,800 Total $250 150 395 400 605 $1,800 CRESTIN INTERNATIONAL, INC. INCOME STATEMENT 1/1/12-12/31/12 Sales $4,500 Cost of goods sold 2,200 Gross profit 2,300 Operating expenses: Salaries, Advertising, etc. 1,300 Depreciation 200 Operating profit 800 Interest 75 Taxes 320 Net profit 405 Dividends Addition to retained earnings 405 0

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