MINICASE CASH FLOWS AND FINANCIAL STATEMENTS AT SUNSET BOARDS, INC. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company's financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors. Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the following information: 2018 2017 $ 255,605 Cost of goods sold Cash 36,884 S 322,742 55.725 81.559 Depreciation 72.158 Interest expense 15,687 17,980 2017 2018 Cost of goods sold $ 255,605 $ 322,742 Cash 36,884 55,725 Depreciation 81,559 72,158 15,687 Interest expense 17,980 Selling and administrative 50,268 65,610 Accounts payable 26,186 44,318 Net fixed assets 318,345 387,855 Sales 501,441 611.224 Accounts receivable 26,136 33,901 29.712 Notes payable Long-term debt 32,441 160,689 175.340 Inventory 50,318 67,674 New equity 19,500 Sunset Boards currently pays out 40 percent of net income as dividends to Tad and the other original investors, and it has a 21 percent tax rate. You are Christina's assistant, and she has asked you to prepare the following: Page 48 1. An income statement for 2017 and 2018. 2. A balance sheet for 2017 and 2018. 3. Operating cash flow for each year 4. Cash flow from assets for 2018 5. Cash flow to creditors for 2018. 6. Cash flow to stockholders for 2018. QUESTIONS 1. How would you describe Sunset Boards's cash flows for 2018? Write a brief discussion 2. In light of your discussion in the previous question, what do you think about Tad's expansion plans