1-

The following financial statements and additional information are reported.

GAMAL INC.
Comparative Balance Sheets
June 30, 2021 and 2020
	2021				2020
Assets
Cash	$	100,600			$	64,500
Accounts receivable, net		69,600				51,400
Inventory		65,800				96,700
Prepaid expenses		5,200				6,000
Total current assets		241,200				218,600
Equipment		129,400				115,000
Accum. depreciationEquipment		(28,200)				(10,300)
Total assets	$	342,400			$	323,300
Liabilities and Equity
Accounts payable	$	26,200			$	32,800
Wages payable		7,900				16,700
Income taxes payable		2,400				4,300
Total current liabilities		36,500				53,800
Notes payable (long term)		49,000				73,000
Total liabilities		85,500				126,800
Equity
Common stock, $5 par value		232,000				189,000
Retained earnings		24,900				7,500
Total liabilities and equity	$	342,400			$	323,300

GAMAL INC. Income Statement For Year Ended June 30, 2021 Sales $ 675,000 405,000 Cast of goods seld 270,000 Gross profit Operating expenses. Depreciation expense Other expenses. $ 52,700 66,700 Total operating expenses 119,400 150,600 Other gains (lesses) Gain on sale of equipment 2,200 Income before taxes 152,800 Income taxes expense 61,120 Net income $ 91,680 Additional Information 1. A $24,000 note payable is retired at its $24,000 carrying (book) value in exchange for cash. 2. The only changes affecting retained earnings are net income and cash dividends paid. 3. New equipment is acquired for $62,600 cash. 4. Received cash for the sale of equipment that had cost $48,200, yielding a $2,200 gain. 5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. 6. All purchases and sales of inventory are on credit. Required a. Prepare a statement of cash flows for the year ended June 30, 2021, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) b. Discuss the main features revealed by this statement