QUESTION 18

Below is an Income Statement and a Statement of Cash Flows for Morrissey Corporation for Year 8.

Increase in Accounts Payable-Merchandise 175 Cash Flow from Operations $1,424 Investing Sale of Equipment $310 Acquisition of Property, Plant and Equipment (610) Acquisition of Marketable Securities (1,300) Cash Flow from Investing -$1,600 Financing Decrease in Short-term Borrowing -$120 Increase in Long-term Debt 550 Increase in Common Stock 400 Decrease in Long-term Debt (200) Dividends (390) Cash Flow from Financing $240 Change in Cash $64 Cash-January 1, Year 3 850 Cash-December 31, Year 8 $914 Income Statement For the Year Ended December 31, Year 3 Sales Revenue $11,400 Gain on Sale of Equipment 60 Interest Revenue 15 Total Revenues $11 ,476 Cost of Goods Sold (7,070) Selling and Administrative Expense (2,240) Interest Expense (210) Income Tax Expense (752) Net Income $1,204 Statement of Cash Flows For the Year Ended December 31, Year 8 Operations Net Income $1,204 Depreciation 370 Gain on Sale of Equipment (60) Increase in Accounts Receivable (160) Increase in Prepayments (70) Decrease in Income Tax Payable (25) Decrease in Other Current Liabilities (150) Decrease in Inventories 140