AApp2-4 Statement of Cash Flows: The financial statements of CWL Corp. for the 20X7 fiscal year follow (in thousands): Statement of Comprehensive Income, for the Year Ended 31 December 20X7: Sales Cost of goods sold Gross profit Depreciation expense Selling and administrative expenses Interest expense Gain on sale of fixed assets Earnings before income tax Income tax expense Earnings and comprehensive income Statement of Changes in Equity, for the Year Ended 31 December 20X7: $5,100 2,900 2,200 450 970 345 (140) 575 310 $ 265 Statement of Changes in Equity, for the Year Ended 31 December 20X7: Cont'd Common Capital: Cont'd Stock Preferred Common Preferred Capital: Conversion Share Retained Shares Shares Options Rights Retirement Earnings Opening balance $ 3,100 $500 $220 $500 200 $1,400 Comprehensive income 265 Dividends-cash (135) Share issuance; options 200 (10) Options recorded 60 Bond conversion 1,400 (500) Share retirement (100) (200) (75) Share retirement (105) (315) Closing balance $4,595 $400 $270 $ 0 $ 0 $ 1,140 Statement of Financial Position, Year Ended December 31 Assets: Cash and cash equivalents Accounts receivable (net) Inventory Fixed assets Accumulated depreciation 20X7 20X6 $ 650 $ 890 1,340 1,420 2,295 2,170 7,160 7,300 (2,040) (2,900) $9.405 $8,880 Total Liabilities and shareholders' equity: Accounts payable and accrued liabilities $ 540 $ 610 130 250 Income taxes payable Notes payable 1,840 400 1,000 Bonds payable Discount on bonds payable (120) Deferred income tax Common shares, no-par Preferred shares, no-par Contributed capital: stock options Common stock conversion rights, convertible bond Contributed capital: preferred share retirement Retained earnings Total 490 820 4,595 3,100 400 500 270 220 500 200 1,140 1,400 $9,405 $8,880 Additional information: 1. There is a stock option plan for executives, on which $60 of expense was recorded. Options were exercised during the year. 2. The bond payable was convertible and was converted during the year after discount amortization of $20 had been recorded. 3. Fixed assets with an original cost of $1,650 and a net book value of $340 were sold at a gain of $140. 4. Assume unexplained changes in accounts are from normal transactions. Required: 1. Prepare the statement of cash flows, using the two-step indirect method. Include a list of required note disclosure for non- Page 1645 cash transactions. 2. Prepare the separate disclosure of cash flow for interest paid, and income tax. 3. Repeat the operating activities section of the SCF, using the direct method of presentation