1. The US Army orders 100,000 uniform blouses from Low Bid, Inc. at $1 per blouse and agrees to pay progress payments of $50k, $20k, and $20k, remainder on delivery. Low Bid rents its plant, but equipment and other fixed assets cost $30k. The resulting financial situation is shown on Balance Sheet 1:

2. In preparation for manufacturing activity, Low Bid buys $20k worth of cotton cloth on terms of 30 days and spends $20k to cut it. Of this 20k, half is paid in cash and the rest is owed in the form of accrued wages.

ASSETS	.	LIABILITIES	.
Current Assets Cash Work-in-progress Inventories [Material] [Labor]	$10k   $40k [$20k] [$20k]	Current Liabilities Prepaid Sales Accounts Payable Accrued Wages Payable	$50k $20k   $10k
Fixed Assets Plant and Equipment	$30k	.	.
.	,	TOTAL LIABILITY	$80k
TOTAL ASSETS	$80k	TOTAL LIABILITY & NET WORTH	$80k

3. To complete the blouses, additional labor costs of $20k are incurred and paid in cash. In the meantime, the next two progress payments come in from the USA.

ASSETS	.	LIABILITIES	.
Current Assets Cash Finished goods Inventories [Material] [Labor]	$30k $60k [$20k] [$40k]	Current Liabilities Prepaid Sales Accounts Payable Accrued Wages Payable	$90k $20k   $10k
Fixed Assets Plant and Equipment	$30k	.	.
.	.	TOTAL LIABILITY	$120k
TOTAL ASSETS	$120k	TOTAL LIABILITY & NET WORTH	$120k

4. Low Bid ships the blouses to the USA, invoicing the Army for the remaining 10k to be paid in 30 days. Accrued wages and accounts payable are also paid. The rent comes due.

ASSETS	.	LIABILITIES	.
Current Assets Accounts Receivable	$10k	Current Liabilities Accounts payable [rent]	$10k
Fixed Assets Plant and Equipment	$30k	TOTAL LIABILITY	$10k
.	.	CAPITAL	$30k
TOTAL ASSETS	$40k	TOTAL LIABILITY & NET WORTH	$40k

1.	Using the information presented below, prepare the following:
	a.	An end of the year balance sheet
	b.	An income statement for the year
	c.	A statement of cash receipts and disbursements for the year
	d.	A sources and uses of funds statement

2.	Beginning of the year balance sheet:
	Assets, current:
		Cash		177k
		Prop. tax rec.		200k
		Materials and supplies		50k
	Assets, long-term:
		Real property, plant	10,000k
		Accumulated deprec.* *Estimated at $3050 yr	( 3,050k)
Total Assets			7,377
	Liabilities, current:
		Accounts payable		35k
	Liabilities, long-term:
		Accrued pensions** **Estimated using standard actuarial tables		500k
		Principal on 20 yr note	6,000k
Total Liabilities			6,535
Fund Balance/Operating Capital			842k
Total Liabilities & Fund Bal.			7,377

2.	Financial Events:
	a.	During the year, the municipality levied $2.1M in property taxes, $1.9M were collected, and $50k back taxes were also collected.
	b.	The municipality performed $600k worth of services that were state reimbursable; the state paid $575k.
	c.	During the year, employees and contractors were paid $1.8M for services rendered; payment was in cash. In addition, employees accrued $180k in pensions and other benefits and $45k of existing liabilities were discharged.
	d.	The municipality was billed $265k for rent; $165k was paid in cash.
	e.	During the year, the municipality purchased $400k in materials and supplies (all of which were delivered), paid its outstanding accounts of $35k, and paid $165k for the materials it received. It consumed $425k in materials and supplies during the year.
	f.	Interest on outstanding debt in the amount of $230k came due during the year; this amount was paid in full.
	g.	The municipality also issued $2.95M in 20 yr. maturity bonds. This amount was received in cash and the cash was used to acquire a building, for which the municipality paid a sum of $3M.

LEDGER

(in thousands of dollars)

[1] 2100 [3] 600	1950 [2] 575 [4]
$2700	$2525

[11] 400

425 [13]

[16] 3000

305 [17]

Beginning of the year Balance Sheet

Uses of Funds

Sources of Funds

End of the year Balance Sheet

Current Assets
	Cash	177	35		212
	AR	200	175		375
	M&S	50		25	25
Total CA		427			612
Long-term Assets
	RP, P&E	10,000	3,000		13,000
	Accum. Dep.	(3,050)		305	(3,355)
Total Assets		7,377			10,257
Liabilities:
	AP	35		300	335
	PL	500		135	635
	LTD	6,000		2,950	8,950
Operating Capital (FB)		842	(505)*		337
Total Liab & FB		7,377			10,257
			3,715	3,715