AP5-9 (Prepare statement of cash flows) Organic Developments Ltd. (ODL) is an importer of organic produce from California. The company has been experiencing significant growth and is preparing to approach the bank for a loan to acquire additional capital assets. As CFO, you are tasked with preparing the statement of cash flows that is required as part of the loan application. You have the statement of financial position and the statement of income to help you prepare the statement of cash flows. In addition you also have the following information: 1. During the year, the company borrowed $14,000 by increasing its bank loan payable. 2. In September, ODL sold equipment for $6,000 cash. The equipment had originally cost $134,000 and had a net carrying amount of $14,000 at the time of sale. 3. In June, ODL acquired land with a value of $120,000 by Issuing common shares with an equivalent value The land is to be used as a site for a warehouse it hopes to construct in the next year. Application Problems 239 ORGANIC DEVELOPMENTS LTD. Statement of Financial Position As at October 31 2015 $ 36,000 68.000 160.000 Current assets: Cash Accounts receivable Inventory Total current assets Equipment Accumulated depreciation, equipment 5 45.000 58.000 150.000 285.000 620.000 (300.000 120.000 $ 726.000 264.000 S-10.000 360,000) Land $ 444.000 Liabilities and Shareholders' Equity Current liabilities Accounts payable Dividends payable Total current liabilities Bank loan payable Common shares Retained earnings $ 82.000 30 000 112,000 74.000 300.000 240.000 $726.000 $ 40,000 36.000 76,000 120.000 180,000 68.000 $444,000 ORGANIC DEVELOPMENTS LTD. Statement of Income For the year ended October 31, 2016 Sales revenue $1.040,000 520.000 Cost of goods sold Gross margin 520.000 Expenses Advertising expense $ 30,000 Wage expense 144,000 Utilities expense 12.000 Depreciation expense 60,000 Rent expense 26.000 272.000 Net income from operations 248,000 Loss on sale of equipment 8.000 Net income $240,000 Required: a. Using the information, prepare the statement of cash flows for Organic Developments Lid. for the year ended October 31, 2016. b. Determine the cash flows from operating activities using the direct method