The information below relates to Reynolds Ltd. Use it to prepare a statement of cash flows using the direct method and a reconciliation of profit to cash provided by operating activities.

Reasoning
The direct method reports cash receipts less cash payments to arrive at net cash provided by operating activities. For clarification, payments to suppliers are shown separately from payments for expenses in the solution. However, they are usually combined in external statements of cash flows. Similarly, the sale of land and the sale of equipment are shown separately in the solution but are usually combined and shown as proceeds from the sale of property, plant and equipment in external statements of cash flows.

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REYNOLDS LTD Statement of financial position as at 31 December 2019 2019 2018 Change Increase/decrease ASSETS Cash Accounts receivable Inventories Prepaid expenses Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets LIABILITIES AND EQUITY $ 54000 $ 37 000 $ 17 000 increase 68 000 26 000 54 000 4000 45 000 200 000 (21 000) 193 000 6000 70 000 200 000 (11000) 68 000 (10000) 42 000 increase 54 000 increase 2000 decrease 25000 decrease 10000 increase 125 000 increase 18000 increase 10000 increase (28 000) $569 000 $386 000 Accounts payable $ 23000 $ 40000 $17000 decrease Accrued expenses payable Convertible notes payable 10000 110000 Share capital 220 000 Retained earnings 206 000 150 000 60 000 136 000 40 000 decrease 160 000 increase 70 000 increase Total liabilities and equity $569 000 $386 000