Avatar Company

Balance Sheet

December 31, 2017

	2017	2016	Change
Cash	$21,000	$18,000	$3,000
Accounts receivable	31,000	35,000	(4,000)
Inventory	53,000	25,000	28,000
Property, Plant & Equipment (net)	120,000	90,000	30,000
Total assets	$225,000	$168,000	$57,000
Accounts payable	$4,000	$6,000	$(2,000)
Accrued liabilities	2,000	1,000	1,000
Long-term notes payable	84,000	90,000	(6,000)
Total liabilities	$90,000	$97,000	$(7,000)
Common shares	$42,000	$17,000	$25,000
Retained earnings	93,000	54,000	39,000
Total equity	$135,000	$71,000	$64,000
Total liabilities and equity	$225,000	$168,000	$57,000

Avatar Company

Income Statement

For the Year Ended December 31, 2017

Revenues and gains:
Sales revenue	$240,000
Interest revenue	1,000
Gain on sale of plant assets	4,000
Total revenues		$245,000
Expenses:
Cost of goods sold	$110,000
Salary expense	45,000
Amortization expense	12,000
Other operating expenses	23,000
Interest expense	1,000
Income tax expense	5,000
Total expenses		196,000
Net income		$49,000

Avatar Company

Statement of Retained Earnings

For the Year Ended December 31, 2017

Retained earnings, January 1, 2017	$54,000
Net income	49,000
Dividends	(10,000)
Retained earnings, December 31, 2017	$93,000

Additional information provided:

Equipment costing $52,000 was purchased for cash.

Equipment with a net asset value of $10,000 was sold for $14,000

Depreciation expense of $12,000 was recorded during the year.

During 2017, the company repaid $40,000 of long-term notes payable.

During 2017, the company borrowed $34,000 on a new note payable

There were no stock retirements during the year.

There were no sales of treasury stock during the year.

DRAW CASH FROM OPERATING ACTIVITIES USING THE DIRECT METHOD.