GG’s Coffee Ltd.’s accountants have assembled the following data for the year ended December 31, 2020:

Transaction data for 2020:

Required

1. Prepare GG’s Coffee Ltd.’s cash flow statement using the indirect method to report operating activities. Note any additional disclosures that are required.

2. Evaluate GG’s Coffee Ltd.’s cash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.

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A B D E Increase/ 1 2020 2019 (Decrease) 2 Current assets Cash and cash equivalents $ 75,500 $ 56,750 3 Accounts receivable 174,250 155,500 4 Inventory 271,500 212,500 Prepaid expenses 13,250 10,250 Note payable (for inventory purchases) 6 Current liabilities 56,500 45,750 Accounts payable Income tax payable 7 132,250 139,500 8 96,500 41,750 Accrued liabilities 38,750 68,000 9.