Sales Returns & Allowances (150,000) (75,000) Net Sales 1,350,000 1,955,000 Cost of Goods Sold (750,000) (1,500,000) Gross Margin 600,000 455,000 Wages & Salary Expense (50,000) ( (80,000) Utility Expense (10,000) (20,000) Marketing Expense (3,500) Interest Expense (25,000) (40,000) Amortization (7,000) Depreciation (75,000) (100,000) Operating Income 436,500 208,000 Loss on Sale of franchise rights (7,000) Income Tax Expense (45,000) (60,000) Net Income 391,500 141,000 Statement of Retained Earnings for 2019 for 2020 Beg. Retained Earnings 299,000 409,500 Plus Net Income 391,500 141,000 less Dividends Paid (281,000) (340,000) End. Retained Earnings 409,500 210,500 3/3 Balance Sheet as of as of 12/31/2019 12/31/2020 286,500 Assets: Cash Accounts Receivable Inventory Prepaid Insurance 30,000 40,000 15,000 638,500 50,000 20,000 65,000 Franchise Rights (Acc. Amort) 8,000 50,000 (14,000) (7,000) 350,000 (50,000) Equipment (Acc. Dept.) 475,000 700,000 Land Total Assets: ( (150,000) 500,000 1,577,500 1,429,500 Liabilities: Accounts Payable Wages Payable 30,000 130,000 15,000 5,000 20,000 20,000 Rent Payable Unearned Revenue Short-term Note Payable 5,000 2/3 75,000 5,000 Dividdents Payable 7,000 550,000 Long-term Note Payable Total Liabilites: 400,000 545,000 717,000 Shareholders' Equity: : Common Stock 100,000 Paid in Capital, Common 375,000 200,000 450,000 210,500 860,500 Retained Earnings 409,500 Total Shareholder's Eq. 884,500 Income Statement for 2019 for 2020 Sales Revenue 1,500,000 2,030,000 3.3 26 14:26 f p.pdf Q Required: Statement of Cash Flows-Year ending 2020 Cash Flows from Operations: Net Income: add back non-cash expenses Amortization Depreciation subtract gains, add losses: loss on sale of franchise rights subtract 1 in current assets. 1 in Accounts Receivable odd in current assets: in inventory in Prepaid Insurance odd 's in current liabilities: 1 in Accounts Payable subtract in current liabilities in wages Payable in Unearned Revenue Net Cash flow from Operations: Cash flow from Investments: Cash from sale of Franchise Rights Cash used to purchase Equip. Cash from sale of land Net Cash flow from Investments: Cash flow from Financing Cash to ST Note Payable Cash from 1 of LT Note Payable. Cash from issuance of Common Stk. Cash used to pay dividends Net Cash flow from Financing: Total Change in Cash