Problem 2

Balance Sheet
	Year 2	Year 1
Cash	$ 32	$ 8
Net Accounts Receivable	76	50
DTA - NOL	1.6	12
Furniture	100	100
Accumulated Depreciation	(20)	(5)
Total Assets	$ 189.6	$ 165
Accounts Payable	$ 8	$ 10
Deferred Tax Liability	29.6	27
Bank Loan	$ 30	$ 53
Total Liabilities	$ 67.6	$ 90
Common Stock	$ 20	$ 20
Retained Earnings	102	55
Total Liabilities & Equity	$ 189.6	$ 165
Income Statement
Revenue	$ 500	$ 450
Operating Expense	420	370
Depreciation Expense	15	5
Net Income (Loss) before tax	$ 65	$ 75
Income Tax Expense	13	15
Net Income	52	60

Company paid dividends each year.

Required:

1. Prepare Cash Flow Statement for Year 2
2. Prepare Tax Provision AJE for both years. Note Year 1 was the first year of operations.

	Year 2
	Details	Total
Cash Flow From Operations
Sub Total CFO
Cash Flow From Investing
Sub Total CFI
Cash Flow From Financing
Sub Total CFF
Net Change in Cash
Beginning Cash Balance
Ending Cash Balance

Tax Provision JEs on next page.

Account title	Debit	Credit
Record tax provision for year 1

Account title	Debit	Credit
Record tax provision for year 2