1. The information below depicts 2013 summary for Match Company. 2. Lancaster Inc.’s December 31, 2013 balance sheet accounts are copied below:

1.       1.  The information below depicts 2013 summary for Match Company. The company has two operations, that is, manufacturing and wholesale.  The amounts are in thousands.

Sales revenue                                                  $25,000
Cost of goods sold                                           16,000
Interest revenue                                                70,000
Selling and administrative expenses                 4,700
Goodwill write-off                                                820
2014 Income taxes                                             1,244
Gain on sale of investments (This is normal and recurring)      110
Loss due to flood damage, net of tax (This is extraordinary item)     390
Loss on disposition of wholesale division, net of tax     440
Loss on operations of wholesale division, net of tax      90

Match Company has 500,000 shares of common stock outstanding throughout the year. The company decided to discontinue its entire wholesale operations. On August 31, 2013, Match Company sold the wholesale operations to Reed Company.

Required:

Prepare a multi-step income statement and earnings per share for the Match Company.       

L     2.  Lancaster Inc.’s December 31, 2013 balance sheet accounts are copied below:

Cash                                                                    $20,000

Accounts receivable                                            21,200  

Accounts payable                                                30,000
Long-term notes payable                                   41,000

Long-term Investments                                       32,000

Common stock                                                  100,000
Property, plant, and equipment assets (net of depreciation)  81,000

Retained earnings                                              23,200

Land                                                                    40,000 

During 2014, the following transactions occurred. Lancaster Inc.

1.       Purchased a tract of land for $18,000 cash.

2.       Sold part of its $32,000 investment for $15,000. This transaction resulted in a gain of $3,400. The investment was classified as available-for-sale.

3.       Issued additional $20,000 in common stock. The issue was at par.

4.       Declared and paid dividends of $8,200 to stockholders.

5.       Purchased land through the issuance of $30,000 in bonds.

6.       Retired Long-term notes payable with the face value of $16,000. The company paid $16,000 cash.

7.       Recorded depreciation expense of $11,000.

Lancaster’s Net income for 2014 was $32,000.

Balances on December 31, 2014 are below:

Cash              $32,000

Accounts Receivable      $41,600

Accounts Payable          $30,000

Required:

a.       Prepare a statement of cash flows for year ended December 31, 2014. Use the indirect method for cash flows from operating activities.

b.      How can users of financial statements utilize statement of cash flows in making informed decisions?