After completing BUS 285 and 385 in 2020, the Faculty of Business Administration hired you as a Lab Instructor. Next weeks BUS 285 lab will focus on the cash flow statement. The BUS 285 instructors are attending a conference and did not have an opportunity to prepare the lab solution prior to their flight.

They provided you with the following question:

Cash Flows Are Fun Inc.

Comparative Statements of Financial Position/Balance Sheets December 31

	2020		2019
Cash		$53,625	$25,000
Accounts receivable		58,000	51,000
Inventory		40,000	60,000
Prepaid expenses		5,000	4,000
Land		20,000	50,000
Equipment		154,000	130,000
Accumulated depreciation - equipment		(35,000)	(25,000)
		$295,625	$295,000
Accounts payable		$54,000	$44,000
Income taxes payable		4,000	6,000
Long term loan payable		68,000	79,000
Common shares		130,000	130,000
Retained earnings		39,625	36,000
		$295,625	$295,000

Cash Flows Are Fun Inc.

Income Statement

Year Ended December 31,2020

Sales		$338,150
Gain on sale of equipment		2,000
340,150
Cost of goods sold	165,000
Operating expense	130,000
Interest expense	11,400
Income tax expense	24,125	330,525
Profit		$9,625

Additional information:

• Depreciation expense of $24,000 is included in operating expenses.
• No gain or loss resulted from the sale of land during 2020. Equipment with a cost of $20,000 and accumulated depreciation of $14,000 was sold during 2020.

The instructors have asked that you prepare the COMPLETE statement of cash flows (in good form) using the INDIRECT METHOD such that it can be shared with the BUS 285 students at the end of the lab. Please ensure you provide detailed supporting calculations. thank you