A1 fi Question 4 of 6 (16 marks) G H M N O o R S U V Working Space for Calculations Leonard Inc. Statement of Cash Flows (Direct Method) For the year ended December 31, 2021 B D F The following information was drawn from the financial records of Leonard Inc., as 5 at the company's fiscal year-end. 6 7 Leonard Inc. 8 Balance Sheet 9 As at December 31 10 2021 2020 11 Assets 12 Cash 325,000 428,000 13 Accounts receivable 465,000 318,000 14 Inventory 675,000 800,000 15 Prepaid operating expenses 119,000 130,000 16 Long term Investments 350,000 500,000 17 Equipment 1,850,000 1,785,000 18 Less: Accumulated depreciation (525,000) (410,000) 19 3,259,000 3.551.000 20 Liabilities and Shareholders' Equity 21 Accounts payable 322,000 272,000 22 Current income tax payable 116,000 167,000 23 Future income tax liability 15,000 12,000 24 Bonds payable 718,000 1,200,000 25 Common shares 625,000 600,000 26 Retained earnings 1,463,000 1,300,000 27 3,259,000 3,551,000 28 29 Summary Q1 - Taxes Q2 - Pensions Q3 - Leases 04 - Cash Flow Q5 - CFI (Bonds) Q6 - EP: ... Ready + 70% 1:09 PM G A1 Question 4 of 6 (16 marks) F G H 1 M N O P R S U V 30 31 32 33 34 35 36 B E Leonard Inc. Income Statement For the year ended December 31, 2021 Sales 1,940,200 Cost of goods sold 1,259,000 Gross profit 681,200 Operating expenses 421,600 Income from operations 259,600 Interest expense Gain on sale of equipment 12.500 Income before income tax 264,900 Income tax expense: Current 62,800 Future 3.000 Net income 199.100 37 7,200 38 39 40 41 42 43 44 45 46 47 ADDITIONAL INFORMATION: 48 Depreciation expense is included in "operating expenses." 49 Accounts payable is related to the purchase of inventory. During the year, a piece of equipment that originally cost $125,000 was sold for cash. The equipment was 30% depreciated at the time of the sale. 50 (Hint: Depreciation & Gain on Sale) 51 New equipment was purchased this year. 52 Long-term investments were sold for cash during the year. 53 Hint: Future income tax expense should be considered for the indirect method 54 Hint: Look at all tax accounts for the direct method Summary Q1 - Taxes Q2 - Pensions Q3 - Leases Q4 - Cash Flow Q5 - CFI (Bonds) Q6 - EP: ... Ready + 70% AutoSave Off