20X3 $ 32,000 980,000 761, 600 1, 773, 600 300,000 2, 418,000 (1, 756, 000) 194, 000 $ 2,929, 600 DISCOVERY COMPANY Statement of Financial Position As of 31 December 20X4 Assets Current assets: Cash $ 37,000 Accounts receivable 1,030, 000 Inventory 840,000 Total current assets 1,907, 000 Land 700,000 Plant and equipment 3, 520,000 Less: Accumulated depreciation (1, 781, 600 Patents 186, 000 Total assets $ 4, 531, 400 Liabilities and shareholders' equity Liabilities: Current liabilities: Accounts payable $ 580,000 Salaries and wages payable 91, 400 Income tax payable 213, 800 Total current liabilities 885, 200 Long-term debt 2, 218,000 Total liabilities 3, 103, 200 Shareholders' equity: Common shares, no-par 366, 000 Retained earnings 1,062, 200 Total shareholders' equity 1, 428, 200 Total liabilities and shareholders' equity $ 4,531, 400 $ 632, 400 84, 200 198, 600 915, 200 1, 190,000 2, 105, 200 360,000 464, 400 824, 400 $ 2,929, 600 7, 400,000 DISCOVERY COMPANY Statement of Comprehensive Income For the year ended 31 December 20X4 Sales revenue Less expenses: Cost of goods sold $4,082,000 Selling and administrative expenses 1,090,000 Depreciation and amortization 370,000 Rent expense 30,000 Miscellaneous expenses 284, 000 Total expenses Other revenues and expenses: Interest expense 69, 200 Gain on sale of equipment (12, 000 Loss on debt retirement 22,000 Earnings before income tax Income tax expense Net earnings and comprehensive income 5,856, 000 79, 200 1, 464, 800 623, 600 $ 841, 200 Additional information: a. The company sold equipment that had an original cost of $584,000 and a net book value of $247,600. Other equipment was purchased for cash. Patent amortization was $8,000. b. Long-term debt with a face value of $800,000 was repaid during the year and other long-term debt was issued at a lower interest rate. c. The company issued shares for land during the period. Other common shares were retired (bought back and cancelled) at book value. d. Assume unexplained changes in accounts stem from logical transactions. Required: 1. Prepare the SCF, using the indirect method. Use the two-step method for operations. (Deductible amounts and Cash outflows should be indicated with minus sign.) DISCOVERY COMPANY Statement of Cash Flows For the year ended 31 December 20X4 Operating activities: Net earnings Adjustments for non-cash items: Depreciation and amortization Gain on sale of equipment Adjustments for non-cash items: Depreciation and amortization Gain on sale of equipment Loss on debt retirement Total adjustment Changes in net working capital: Accounts receivable increase Inventory increase Accounts payable decrease Salaries and wages payable increase Income tax payable increase Investing activities: Sale of equipment Purchase of equipment Financing activities: --I--I-II.-15.- Investing activities: Sale of equipment Purchase of equipment Financing activities: Long-term debt retired Common shares retired Cash dividends paid Common shares retired Long-term debt issued Cash balance beginning of the year Cash balance end of the year 2. Prepare the SCF, using the direct method to present cash flows in the operating activities section. (Deductible amounts and Cash outflows should be indicated with minus sign.) DISCOVERY COMPANY Statement of Cash Flows For the year ended 31 December 20X4 Operating activities: Investing activities: Financing activities: Investing activities: Financing activities: Cash balance beginning of the year Cash balance end of the year