cash transactions) during 2021. During the year, they did not sell land or equipment and they did not issue any new notes payable. The company did not repurchase any shares. Honourable Minds Supply Inc. Comparative Balance Sheet As at December 31, 2021 and 2020 Dec 31, 2021 Dec 31, 2020 Difference 17,600 23,200 15,300 19,800 82,200 88,600 Current assets Cash and cash equivalents Accounts receivable Inventories Prepaid expenses Total current assets Non-current assets Land Equipment, net Total non-current assets Total assets 2,300 3,400 6,400 1,100 13,200 4,200 5,300 134,700 121,500 98,000 98,000 65,500 163,500 298,200 60,400 158,400 279.900 5.100 5,100 18,300 Current liabilities Accounts payable Salary payable Other accrued liabilities 38,600 7,200 15,600 31700 8,600 12,100 6.900 1,400 3,500 Current assets Cash and cash equivalents Accounts receivable Inventories Prepaid expenses Total current assets Non-current assets Land Equipment, net Total non-current assets Total assets 17,600 23,200 88,600 5,300 134,700 15,300 19,800 82,200 4,200 121,500 2,300 3,400 6,400 1,100 13,200 --- 98,000 65,500 163,500 298.200 98,000 60,400 158,400 279.900 5,100 5,100 18,300 Current liabilities Accounts payable Salary payable Other accrued liabilities Total current liabilities Non-current liabilities Notes payable Total liabilities 38,600 7.200 15,600 61,400 31,700 8,600 12,100 52,400 6,900 -1,400 3,500 9,000 98,000 159,400 120,000 172,400 -22,000 -13,000 Shareholders' equity Common shares 90,000 Retained earnings 48,800 Total shareholders' equity 138,800 Total liabilities and shareholders 298,200 equity Honourable Minds Supply inc. 70,000 37,500 107,500 20,000 11,300 31,300 279.900 18,300 Honourable Minds Supply Inc. Income Statement For the Year Ended December 31, 2021 226,700 128,800 97,900 Sales revenues Cost of goods sold Gross profit Salary expense Depreciation expense Other operating expense Operating income Interest expense Earnings before tax Income tax expense Net income 22,800 9,700 18,500 51,000 46,900 12,600 34,300 10,100 24,200 Req. 1: Prepare the 2021 statement of cash flows from operating activities using the indirect method. Use table 1 below to present the statement. Req. 2: Calculate the current ratio for both years and enter the correct answer in the provided table 2 below. Indicate whether liquidity (based on this ratio) has improved or deteriorated over time. Req. 3: Which other ratio would you investigate next? Explain your rationale (2-3 sentences). Use table 3 below to enter your response. Paragraph V B I UA E bH op + + Lato (Recomm 18.999 EQ 5 C Current ratio for 2021 (round to 2-digits); Current ratio for 2020 (round to 2-digits): Has liquidity (based on this ratio) improved or deteriorated? Question 32 (3 points) Identify the accounting assumption that best applies to each of the following situations. Note: The same seeum response. Paragraph B I VA + V O Lato (Recomm E SEO 18.999... (A) Req. 3: Financial ratio analysis Which other ratio would you investigate next? Explain your rationale (2-3 sentences). Question 32 (3 points)
