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: Opening balance Comprehensive income Dividends-cash Share issuance; options Options recorded Bond conversion Share retirement Share retirement Closing balance Common Shares $ 3,100 200 1,400 (105) $4,595 Preferred Shares $500 (100) $400 = Cont'd Capital: Options $220 (10) 60 $270 = Common Stock Conversion Rights $500 (500) $0 = Cont'd Capital: Preferred Share Retirement 200 (200) $0 Retained Earnings $1,400 265 (135) (75) (315) $1,140 Statement December 31 of Financial Position, Year Ended Assets: Cash and cash equivalents Accounts receivable (net) Inventory Fixed assets Accumulated depreciation Total Liabilities and shareholders' equity: Accounts payable and accrued liabilities Income taxes payable Notes payable Bonds payable Discount on bonds payable 20X7 $ 650 1,340 2,295 7,160 (2,040) $9,405 $ 540 130 1,840 20X6 $ 890 1,420 2,170 7,300 (2,900) $8,880 $ 610 250 400 1,000 (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 4,595 400 270 1,140 $9,405 820 3,100 500 220 500 200 1,400 $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.