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P 14-10 P LO4 LO 5 LO6 Unifying Concepts: Analysis of Operating, Investing, and Financing Activities Jonathan Beecher is the manager and one of three

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P 14-10 P LO4 LO 5 LO6 Unifying Concepts: Analysis of Operating, Investing, and Financing Activities Jonathan Beecher is the manager and one of three brothers who own the Mile High Sporting Goods Company in Denver, Colorado, Jonathan is pleased that sales were up last year and that his new, small company has been able to expand and open a second store in Denver. After reviewing the balance sheet, however, Jonathan is concerned that Cash balance is decreasing. He can't understand how his company can show net income, based on increased sales, yet has a decreasing Cash balance. He is concerned about what his banker is going to say when they meet next month to discuss a loan for the company to expand to a third store. Jonathan provides the following financial information and asks for your help. Mile High Sporting Goods Company Statement of Comprehensive Income For the Year Ended December 31, 2022 Sales revenue. $420,000 Cost of goods sold 192,000 Gross margin S228.000 Operating expenses Salary and wages $82,000 Depreciation 13,600 Other operating expenses 28,400 124,000 Income before income tax $104,000 Income tax 24,600 Net income $ 79,400 Mile High Sporting Goods Company Comparative Balance Sheets December 31, 2022 and 2021 2022 2021 S 600 1,200 120,000 $121,800 $ 8.600 6.200 102,000 $116 800 Assets Current assets: Cash Accounts receivable (net) Inventory. Total current assets Other assets. Property, plant, and equipment Less: Accumulated depreciation Total other assets. Total assets. . Liabilities and Equity Current liabilities: Accounts payable Wages payable Income tax payable Total current liabilities Other liabilities Notes payable Total labiities $189,600 (38,400) $151,200 $273,000 $92,600 24 800) $ 67 800 $184,600 S 16,400 2,600 2,000 $ 21,000 5 20.800 6,400 4.800 $ 32.000 70,000 $ 91,000 50.000 $ 82 000 Equity Capital stock Retained earings Total equity Total liabilities and equity $ 80,000 102,000 $182,000 $273,000 $ 80,000 22.600 $102,600 $184,600 02 Part 4 Other Dimensions of Financial Reporting Required: 1. Using the indirect method, compute the net cash flows from operations. Also determine net cash flows for investing and financing activities. 2. Interpretive Question: Is Mile High Sporting Goods Company in a good liquidity position? As Mr. Beecher's banker, would you loan him more money to fund the company's expansion

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