Expresso Royale

Balance Sheets Change Effect on

Dec 31 2020 Dec 31 2019 in 2020 Cash

Assets
Cash 8,000 12,000 (4,000)
Accounts receivable 22,000 28,000 (6,000) 6,000
Inventory 94,000 66,000 28,000 (28,000)
Prepaid advertising 12,000 9,000 3,000 (3,000)
Long-term investments -- available for sale 30,000 41,000 (11,000) 11,000
Fair value adjustments to investments - (1,000) 1,000 (1,000)
PPE 1,78,000 1,30,000 48,000 (48,000)
Accumulated depreciation (72,000) (61,000) (11,000) 11,000
Total assets 2,72,000 2,24,000
Liabilities and Equity
Accounts payable 27,000 14,000 13,000 13,000
Wages payable 6,000 2,500 3,500 3,500
Income tax payable 3,000 4,500 (1,500) (1,500)
Common stock 1,39,000 1,25,000 14,000 14,000
Retained earnings 97,000 79,000 18,000 18,000
Unrealized loss on investments - (1,000) 1,000 1,000
Total liabilities and equity 2,72,000 2,24,000

Expresso Royale
Income Statement
Dec 31 2020
Sales 3,85,000
Dividend income 5,000
3,90,000
Cost of goods sold 2,33,000
Wages expense 82,000
Advertising expense 10,000
Depreciation expense 11,000
Income tax expense 17,000
Loss on sale of investments 2,000
Net income 35,000
 Expresso Royale

Statement of Cash Flow

Indirect Method Dec 31 2020

Net income 35,000

Depreciation expense 11,000
Loss on sale of investments 2,000
Accounts receivable 6,000
Inventory (28,000)
Prepaid advertising (3,000)
Accounts payable 13,000
Wages payable 3,500
Income tax payable (1,500)
Cash from operating activities 38,000

Sale of investments 9,000

Purchase of PPE (48,000)
Cash used for investing activities (39,000)

Issuance of common stock 14,000

Payment of dividends (17,000)
Cash used for financing activities (3,000)

Total cash flow (4,000)

Cash at start of year 12,000
Cash at end of year 8,000

Expresso Royale
Statement of Cash Flow
Direct Method Dec 31 2020
Cash received from customers 3,91,000
Cash received as dividends 5,000
Cash paid for merchandise purchases (2,48,000)
Cash paid to employees (78,500)
Cash paid for advertising (13,000)
Cash paid for income taxes (18,500)
Net cash provided by operating activities 38,000

Sale of investments 9,000

Purchase of PPE (48,000)
Cash used for investing activities (39,000)

Issuance of common stock 14,000

Payment of dividends (17,000)
Cash used for financing activities (3,000)

Total cash flow (4,000)

Cash at start of year 12,000
Cash at end of year 8,000