A5-6 Statement of Cash Flows (LO5.4, LO5.5): The financial statements for Totten Limited are shown below: Statement of Comprehensive Income For the year ended 31 December 20X5 Sales revenue Investment revenue Operating expenses, including cost of goods sold Depreciation expense Goodwill impairment Administrative expenses Interest expense Gain on sale of investment Income tax expense Net earnings and comprehensive income Statement of Financial Position As of 31 December Assets Cash Accounts receivable $1,821,300 37,500 793,200 105,000 116,100 621,000 45,300 6,000 73,800 $ 110,400 20X5 20X4 $ 82,500 90,000 307,500 210,000 84 Chapter 5 The Statement of Cash Flows 694,200 630,000 Merchandise Inventory Prepaid Insurance 7,800 19,200 75,000 120,000 Investments 270,000 270,000 Land 1,434,000 930,000 Capital assets, net of accumulated depreciation 173,700 289,800 Goodwill, net of impairment $3,044,700 $2,559,000 Liabilities and Equity Accounts payable Rent payable Income tax payable Bonds payable Pension obligation Common shares Retained earnings $ 637,200 $ 567,000 22,500 15,000 49,200 48,000 1,110,000 900,000 50,100 30,000 972,000 810,000 203,700 189,000 $3,044,700 $2,559,000 During the year, the company purchased a capital asset valued at $30,000; payment was made by issuing common shares. Additional capital assets were acquired for cash. Unexplained changes in accounts relate to logical transactions. Required: 1. Prepare the SCF using the indirect method. Include required note disclosure of non-cash transactions. Omit the separate disclosure of cash flow for interest, investment income, and income tax. 2. Briefly interpret the company's cash transactions for the year, based on the SCF. 45-7 State