Bagel Inc Reported Net Income of $105,000 for the Year Ended

question 140

Essay

Bagel Inc. reported net income of $105,000 for the year ended December 31, 2014. The following items were
included on Bagel's balance sheets at December 31, 2014 and 2013:
Bagel uses the indirect method to prepare its statement of cash flows. Bagel does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2014.
REQUIRED:
1. Prepare Bagel's 2014 statement of cash flows.
2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

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Definitions:

Vestibular System

The sensory system that contributes to balance, spatial orientation, and the coordination of movement.

Position And Acceleration

Fundamental physics concepts describing an object's location in space and its rate of change of velocity, respectively.

Intermediate Frequencies

Frequencies that are between the highest and lowest frequencies in a given range, often used in the processing of signals in radios and other communication devices.

Volley Principle

The volley principle is a theory of hearing that suggests groups of auditory neurons can provide a higher frequency response by firing in succession, allowing for the perception of sounds higher than their individual maximum firing rates.