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Balance Sheet
20042003Edwards, Inc. has prepared the following comparative balance sheets Cash $198,000 $102,000 for 2003 and 2004:
Receivables $106,000 $78,000 2004 2003
Inventory $100,000 $120,000
Prepaid expenses $12,000 $18,000 Cash $ 198,000 $102,000 Plant assets $840,000 $700,000 Receivables 106,000 78,000 Accumulated depreciation $(300,000) $(250,000)Inventory 100,000 120,000 Patent $102,000 $116,000 Prepaid expenses 12,000 18,000

$1,058,000 $884,000 Plant assets 840,000 700,000
Accounts payable $102,000 $112,000 Accumulated depreciation (300,000) (250,000) Accrued liabilities $40,000 $28,000 Patent 102,000 116,000 Mortgage payable $- $300,000
Preferred stock $350,000 $- $1,058,000 $884,000
Additional paid in capital - Preferred stock $80,000 $- Common stock $400,000 $400,000 Accounts payable $ 102,000 $112,000 Retained earnings $86,000 $44,000 Accrued liabilities 40,000 28,000

$1,058,000 $884,000 Mortgage payable â�"â�"â�" 300,000
Preferred stock 350,000
Income statementAdditional paid-in capital preferred 80,000 Sales $1,320,000 Common stock 400,000 400,000
Cost of sales $726,000 Retained earnings 86,000 44,000
Gross profit $594,000
Operating expenses $460,000 $1,058,000 $884,000
Net income $134,000
1. The Accumulated Depreciation account has been credited only for
the depreciation expense for the period.

Statement of cash flows - Indirect Method2. The Retained Earnings account has been charged for dividends of
$92,000 and credited for the net income for the year.
Operating activities
Net income $134,000 The income statement for 2004 is as follows: Add back: Depreciation $50,000
Cash flow before working capital changes $184,000 Sales $1,320,000 Working capital changesCost of sales 726,000
Increase in receivables $(28,000)
Decrease in inventory $20,000...
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