The Bowerman Warehouse Corporation (BWC) is organized in Oregon and operates 15 retail and grocery stores in several of the western U.S. states. BWC is owned by a small group of private equity investors. BWC follows generally accepted accounting principles (GAAP). It uses a calendar year for tax and book purposes. (Note that although this is the same company some of the numbers have changed compared to case 1. Dont just copy and paste the old numbers. Use the attached trial balance instead!) BWCs CFO has asked for your assistance in generating the statement of cash flows for the fiscal year just ended. In order to really understand the process, the CFO would like guidance using the indirect method. Additional Information: Of the accounts receivable $10,000 were written off in the current year. Three percent of current year revenues were on account. BWC sold some of its business assets for a loss of $80,000. Fixed assets in 2022 and 2021 were reported as follows: Buildings Leasehold Improvements Trade Fixtures and Equipment Transportation Equipment Property Held Under Capital Lease Total Cost December 31, 2021 $ 3,630,000 $ 15,600,000 $ 40,000,000 $ 1,420,000 $ 7,100,000 Accumulated Depreciation (2021) $ 2,800,000 $ 12,400,000 $ 35,500,000 $ 1,250,000 $ 5,200,000 Purchases during 2022 $ 100,000 $ 1,100,000 $ 5,860,000 $ 385,000 $ 490,000 Depreciation Expense 2022 $ 91,000 $ 935,000 $ 3,420,000 $ 129,500 $ 274,500 Sale of assets in 2022 Total Cost $ 90,000 $ 3,975,000 $ 8,240,000 $ 510,000 $ 2,100,000 Sale in 2022 Total Accumulated Depreciation $ 6,000 $ 3,485,000 $ 7,720,000 $ 479,500 $ 2,064,500 The company has been issuing stock options (common stock, $1 par value) during the past three years. Some of them have been exercised as the following table illustrates: Stock Option Expenses FY 2020 FY 2021 FY 2022 Number of Options Issued each Year Strike Price for each Grant 5,000 $ 7.50 10,000 $ 9.00 20,000 $ 14.00 Vesting Period (Years) for each Grant 2 5 4 Estimated Value of Option (with $1 par value) $ 5.00 $ 6.50 $ 12.00 Number of Options Exercised from 2020 grant - 2,200 2,700 Number of Options Exercised from 2021 grant - - 1,200 Number of Options Exercised from 2022 grant - - - Market Value of Stock in 2022 (per share) $ 14.00 $ 14.00 $ 14.00 Amount (Percent) Vesting per Year 50% (none in FY 2022!) 20% 25% Estimated Forfeiture Percentage(*) 1.50% 1.50% 2.50% (*) This means that in 2022, the forfeiture estimate has been revised from 1.5% to 2.5% for all options. Management estimates that all options that have vested through 2022 will be exercised by the end of the next fiscal year. They estimate that the market value of the stock will be significantly higher by then. BWC has two ten-year bonds issued, each at $1.5M. Interest payments on the bonds are made semi-annually (June 30 and December 31). One bond was issued five years ago and the other one two years ago with the terms as follows: Bond Information Bond 1 Bond 2 Amount issued $1,500,000 $1,500,000 Stated Interest Rate 8% 8% Market Rate when issued 6.5% 9% First cash interest payment 6/30/2017 6/30/2020 At the end of the current fiscal year, BWC retired Bond 2 and paid $1.2M; at the same time, it issued a new $1.5M 10-year bond with market and stated rate of 6%. Requirements: Using the information provided in the Trial Balance, prepare (in good form) the balance sheets for BWC for the year ended December 31, 2022 and the year ended December 31, 2021. (6 points) Using the information provided in the Trial Balance, prepare (in good form) the income statement for BWC for the fiscal year ended December 31, 2022. (6 points) Using the information provided in the Trial Balance, prepare (in good form) the statement of stockholders equity for the fiscal year ended December 31, 2022. (6 points) Using the information provided in the Trial Balance, prepare (in good form) the statement of cash flows using the indirect method for the fiscal year ended December 31, 2022. (7 points)

\begin{tabular}{|c|c|c|c|c|} \hline \multirow{2}{*}{\begin{tabular}{c} BWC \\ Item \\ Cash \end{tabular}} & \multicolumn{2}{|c|}{ Dec 31, 2022} & \multicolumn{2}{|c|}{ Dec 31, 2021} \\ \hline & & & $ & 2,412,233 \\ \hline Accounts Receivable & $ & 1,460,000 & $ & 1,985,000 \\ \hline Allowance for Doubtful Accounts & $ & (38,000) & s & (40,000) \\ \hline Merchandise Inventories (LIFO) & $ & 9,790,000 & $ & 8,675,000 \\ \hline Prepaid Expenses and Other Current Assets & $ & 820,000 & $ & 1,060,000 \\ \hline Land & $ & 1,280,000 & $ & 1,280,000 \\ \hline Buildings & $ & 3,640,000 & $ & 3,630,000 \\ \hline Accumulated Depreciation - Buildings & $ & (2,885,000) & $ & (2,800,000) \\ \hline Leasehold Improvements & $ & 12,725,000 & $ & 15,600,000 \\ \hline Accumulated Depreciation - Leasehold Improvements & $ & (9,850,000) & s & (12,400,000) \\ \hline Trade Fixtures and Equipment & s & 37,620,000 & $ & 40,000,000 \\ \hline Accumulated Depreciation - Trade Fixtures and Equipment & $ & (31,200,000) & s & (35,500,000) \\ \hline Transportation Equipment & $ & 1,295,000 & $ & 1,420,000 \\ \hline Accumulated Depreciation - Transportation Equipment & $ & (900,000) & s & (1,250,000) \\ \hline Property Held Under Capital Lease & \$ & 5,490,000 & $ & 7,100,000 \\ \hline Accumulated Depreciation - Capital Leases & $ & (3,410,000) & $ & (5,200,000) \\ \hline Other Long-Term Assets (including Securities) & s & 1,470,000 & s & 1,334,969 \\ \hline Deferred Taxes & $ & (2,560,246) & s & (2,418,323) \\ \hline Accounts Payable and Accrued Salaries \& Wages & $ & (8,998,143) & s & (9,400,000) \\ \hline Current Tax Liability & $ & (90,816) & $ & - \\ \hline \multicolumn{5}{|l|}{ Bond Payable } \\ \hline \multicolumn{5}{|l|}{\begin{tabular}{l} Premium \\ Discount \end{tabular}} \\ \hline Common Stock & $ & (451,900) & $ & (448,000) \\ \hline Additional Paid-in Capital & s & (12,798,195) & s & (12,700,000) \\ \hline Retained Earnings & $ & (13,680,382) & $ & (13,950,000) \\ \hline Accumulated other Comprehensive Income & $ & (770,000) & s & (620,000) \\ \hline Treasury Stock & $ & 15,120,000 & $ & 15,120,000 \\ \hline Dividends & $ & 250,000 & $ & 250,000 \\ \hline Sales Revenues & s & (165,500,000) & s & (175,423,000) \\ \hline Cost of Goods sold (LIFO) & $ & 119,200,000 & $ & 128,800,000 \\ \hline Operating and Administrative Expenses & $ & 40,580,000 & $ & 39,210,000 \\ \hline Depreciation and amortization & $ & 4,850,000 & $ & 5,300,000 \\ \hline Bad Debt Expenses & $ & 8,000 & $ & 4,000 \\ \hline Loss (Gain) on Sale of Assets & $ & 80,000 & $ & (275,000) \\ \hline Unrealized Loss (Gain) on Held-for-Sale Securities & $ & (90,000) & s & (150,000) \\ \hline Interest Income & s & (82,000) & s & (98,000) \\ \hline Interest Expense & $ & 540,000 & $ & 880,000 \\ \hline Tax Expense Federal \& State & $ & 232,738 & $ & 1,621,619 \\ \hline Loss (Gain) from Retirement of Bonds & & & $ & - \\ \hline Totals & $ & (0) & 5 & (0) \\ \hline \end{tabular}