Question 1 Arcade Corporation's balance sheet and income statement appear below: Income Statement
Sales	$723
Cost of goods sold	453
Gross margin	270
Selling and administrative expenses	163
Income before income taxes	107
Income tax expense	32
Net income	$75

Balance Sheet
Ending Balance		Beginning Balance
Cash	$42		$36
Debtors	77		80
Inventories	54		58
Plant and equipment	581		480
less: accumulated depreciation	(318)		(294)
Total Assets	$436		$360
creditors	$23		$28
Bonds payable	293		270
Common stock	61		60
Retained earnings	59		2
Total liabilities and equity	$436		$360

The company did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $18.

Required: Prepare a statement of cash flow . (10 marks)

Question 2

Comparative Balance Sheet
Shiner Corporation
Assets		Dec 31, 1996	Dec 31, 1995
Cash		$37,000	$49,000
Accounts Receivable		$26,000	$36,000
Prepaid Expenses		$6,000	$0
Land		$70,000	$0
Building	$200,000		$0
Accumulated Depreciation	$11,000	$189,000	$0
Equipment	$68,000		$0
Accumulated Depreciation	$10,000	$58,000	$0
Total Assets		$386,000	$85,000
Liabilities and Stockholder Equity
Accounts Payable		$40,000	$5,000
Bonds Payable		$150,000	$0
Common Stock		$60,000	$0
Retained Earnings		$136,000	$20,000
Total Liabilities and Stockholder Equity		$386,000	$85,000

Income Statement
Shiner Corporation
Revenue		$492,000
Operating Expenses	$269,000
Depreciation	$21,000	$290,000
Income before Income Taxes		$202,000
Income Tax Expense		$68,000
Net Income		$134,000

Additional information:

1. During the year Shiner Corporation paid dividends of $18,000.
2. Shiner also issued $150,000 in bonds.

Copy and complete the statement below: (15 marks)

Statement of Cash Flows
Cash Flow from Operating Activities
Net Income
Adjustments to reconcile net income to net cash
Depreciation Accts Receivable decrease
Prepaid Expense increase
Accts Payable Increase
Net cash provided from Operating Activities
Investing Activities
Land Purchase
Building Purchase
Equipment Purchase
Financing Activities
Dividend payment to shareholders
Issuance of Bonds Payable
Net Decrease in Cash
Cash Jan 1, 1996
Cash Dec 31, 1996