Toshiro group Inc is a fast growing global conglomerate. He has hired some bright graduates from EU to help him modernise the company. He must close his consolidated accounts for December 2019 and do some planning for 2020 so all this can be presented to the board. You have been recruited as a consultant by the CEO at the head office to help him. You are recent graduate from EU Business School. Your first assignment is to help the various finance heads and provide all details in a report. The CEO, Toshiro is very busy and fully expects you to help him get through this busy period and show your deep insights about finance and accounting.

ANNEX 1 - The CEO's questions.

1. The income statement below was prepared by a new and inexperienced employee in the accounting department of Toshiro Space Ltd a new California based business venture in the group :

TOSHIRO SPACE LTD Income Statement For the Year Ended December 31, 2019 Net sales ......... $9,800,000 Gain on sale of treasury stock .... 47,000 Excess of issuance price over par value of capital stock...... 640,000 Prior period adjustment (net of income taxes). 90,000 Extraordinary gain (net of income taxes) .... 50,000 Total revenue ........ . ..... $10,627,000 Less: Cost of goods sold... $5,000,000 Selling expenses ....... ..... 1,310,000 General and administrative expenses. 942, 000 Loss from settlement of litigation... 12, 000 Income taxes on continuing operations.......... 810,000 Operating loss on discontinued operations (net of income tax benefit) ..... 170,000 Loss on disposal of discontinued operations (net of income tax benefit) ...... 390, 000 Cumulative effect of change in accounting principle (net of income tax benefit)............... 92, 000 Dividends declared on capital stock....................." 400,000 Total costs and expenses...... .. .... 9.126.000 Net income............ mum $1.501.000\fJAN FEB MAR INFLOWS OUTFLOWS NET CASHFLOWS Bank balance at 50,000 beginning of month Bank balance at end monthTOSHIRO TOOLS Income statement for year 2018 2019 Sales . . . . . . . $500,000 $ 350,000 Less: Cost of goods sold 200,000 140,000 Gross profit on sales . . . . . . . . . . . . . $300,000 $ 210,000 Less: Operating expenses (including depreciation of $34,000 in 2014 and $35,000 in 2015) 260,000 243,000 Loss on sale of marketable securities -0- 1,000 Net income (loss) . . $ 40,000 ($ 34,000) TOSHIRO TOOLS Balance sheet as at 31 December 2018 2019 Assets Cash and cash equivalents $ 10,000 $ 60,000 Marketable securities 20,000 5,000 Accounts receivable 40,000 23,000 Inventory . . . . . . . . 120,000 122,000 Plant and equipment (net of accumulated depreciation) . . . . . . 300,000 285,000 Totals . .. . . $490,000 $495,000 Liabilities & Stockholders' Equity Accounts payable . . $ 50,000 $ 73,000 Accrued expenses payable . . . . . . . . . . . . . . 17,000 14,000 Note payable . . . . . .. 245,000 253,000 Capital stock (no par value) . . . . . . . 120,000 135,000 Retained earnings .. . . . . . . 58,000 20,000 Totals .. . . . . $490,000 $495,000