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Ayayai Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2020: AYAYAI INC. Comparative Statement of Financial

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Ayayai Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2020: AYAYAI INC. Comparative Statement of Financial Position December 31 2020 2019 $ 52,610 $ 25,010 58,000 51,010 40,000 60,010 5,020 4,010 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Goodwill Total assets 156,020 130,010 (35,020) (25,010) 20,000 52,000 $ 296,630 $ 297,040 $ 46,020 $ 40,010 4,000 6,010 8,010 4,010 8,000 10,010 Accounts payable Income tax payable Salaries and wages payable Short-term loans payable Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity 60,000 71,000 130,000 130,000 36,000 40,600 $ 296,630 297,040 $ 340,100 165,000 AYAYAI INC. Income Statement Year Ending December 31, 2020 Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense Impairment loss-goodwill Gain on disposal of equipment Income before income tax 175,100 120,000 55,100 $ 11,500 32,000 (2.100) 41,400 13,700 Income tax expense 4,100 Net income $ 9,600 Additional information: 1. 2. Dividends on common shares in the amount of $5,000 were declared and paid during 2020. Dividends paid are treated as finar Depreciation expense is included in operating expenses, as is salaries and wages expense of $ 69,500. Equipment with a cost of $ 22,000 that was 70% depreciated was sold during 2020. 3. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis eg. (15,000).) Ayayai Inc. Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2020 Cash Flows from Operating Activities Net Income /(Loss) 9600 Adjustments to reconcile net income/loss to net cash provided by operating activities: Depreciation Expense 31010 Impairment Loss, Goodwill , 32000 Gain on Disposal of Equipment -2100 Increase in Accounts Receivable -6990 Decrease in Inventory 20010 Increase in Prepaid Rent V -1010 Increase in Accounts Payable 6010 Increase in Salaries and Wages Payable 4000 Decrease in Income Tax Payable V -2010 Total Adjustments 80920 Net Cash Provided by Operating Activities 90520 Cash Flows from Investing Activities Proceeds on Sale of Equipment 11100 Purchase of Equipment -56010 Net Cash Used by Investing Activities -44910 Cash Flows from Financing Activities Principal Pavments on Short-Term Loans V -2010 Principal Payments on Long-Term Loans V - 11000 Dividends paid -5000 Net Cash Used by Financing Activities -18010 Net Increase in Cash 27600 Cash. Januarv 1. 2020 25010 V Cash, December 31, 2020 52610

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