[ Statement of Cash Flows and Cash Burn or Build ] Salza Technology Corporation increased its salesfrom $375,000 in 2012 to $450,000 in 2013 as shown in the firm s income statements presented below.LeAnn Sands, chief executive officer and founder of the firm, expressed concern that the cash accountand the firm s marketable securities declined substantially between 2012 and 2013. Salza s complete bal-ance sheets are also shown. Ms. Sands is seeking your assistance in the preparation of a statement of cash flows for Salza Technology.

A. Prepare a statement of cash flows for 2013 for Salza Technology Corporation.

B. Provide a brief description of what happened in terms of cash flows (both inflows and outflows) forSalza between 2012 and 2013.

Salza Technology Corporation Annual Income Statements (in $ Thousands)

2012 2013

Net sales $375 $450

Less: Cost of goods sold -225 -270

Gross Profit 150 180

Less: Operating Expenses -46 -46

Less: Depreciation -25 -30

Less: Interest -4 -4

Income Before Taxes 75 100

Less: Income taxes -20 -30

Net Income $55 $70

Cash Dividends $17 $20

Balance Sheets as of December 31 (IN $ Thousands)

2012 2013

Cash $39 $16

Accounts Rece 50 80

Inventories 151 204

Total current assets 240 300

Gross fixed assets 200 290

Less accumulated depreciation -95 -125

Net Fixed Assets 105 165

Total Assets $345 $465

Accounts payable $30 $45

Bank Loan 20 27

Accured Liabilities 10 23

Total Current Liabilities 60 95

Long-Term Debt 15 15

Common Stock 85 120

Retained Earnings 185 235

Total Liabilities & Equity $345 $465