Question

1. Grayson Enterprise manufactures food processing equipment. Use Grason’s two most recent balance sheets and most recent income statement to prepare, IN GOOD FORM, a statement of cash flows for 2010 (not a worksheet). The company paid dividends of $6,250 during 2010.

Grayson Enterprise
Balance Sheet
As of December 31,	2010	2009
Assets:
Cash and cash equivalents	$41,900	$25,000
Accounts Receivable	24,000	6,250
Inventory	30,000	36,000
Current Assets	95,900	67,250
Equipment	42,000	38,500
Less: Accumulated depreciation	-14,000	-7,000
Land	25,000	10,000
Total assets	$148,900	$108,750
Liabilities
Accounts Payable	$17,500	$22,500
Accrued Salaries Payable	5,500	8,000
Rent Expense Payable	2,200	1,000
Income Tax Payable	6,900	4,000
Current Liabilities	32,100	35,500
Long-term note payable	50,000	30,000
Total Liabilities	82,100	65,500
Stockholders’ Equity:
Common stock	42,000	30,000
Retained earnings	24,800	13,250
Total liabilities and stockholders’ equity	$148,900	$108,750

Grayson Enterprise
Income Statement
For the year ended December 31, 2010
	$147,000
Cost of goods sold	-84,000
Gross Profit		$63,000
Operating Expenses
Depreciation expense	-7,000
Salary expense	-14,600
Insurance Expense	-2,500
Rent Expense	-10,000
Interest Expense	-4,200
Total Operating Expenses		-38,300
Income from Operations		24,700
Income Tax Expense		-6,900
Net income		$17,800

Answer 1