CHAPTER Statenment of Cash Flows 1atement of Cash FlosDirect and toniune Methoday Cs nr everal ssores and is a publicly traded company The coespuny in current Guas Inc, a major resailer of bicycles and aces 31, 2017 are as folloen gosition and income tanement for Gu an at My GUAS INC Statement of Financial Pesition As at May 3 33,250 20.000 Prepaid expenses Total current ansets 596.500 501,500 Net plant assets Total assets Current liabilities Accounts payable 5734.050 $661.100 Salaries and wages payable $123.000 61,000 $115,000 72,000 Interest payable -24.700-22e00 Total current sabilities 208,700 Mortgnge payable Total liabilties 335,750 280,000 Common shares Retained earnings Total shareholiders' equty Total liablites and shareholders' equity 050 -m. GUAS INC. Income Statement For the Year Ended May 31, 2017 $1.345,800 Sales Cost of goods sold Gross marpn Expenses Salaries and wages expense Interest expense Other operating expenses 531.800 207,800 66,700 24,800 Total operating expenses Operating income Income tax expense Net earnings 206,500 S 141,100 The following is additional informution about transactions during the year ended May 31, 2017 for Guas Inc., which follows IFRS 1. Plant assets costing $95,000 were purchased by paying $44,000 in cash and issuing 5,000 common shares 2. The"other expenses" relate to prepaid items 3. In onder to supplement its cash, Guas issued 4,000 additional common shares. 4. There were no penalties assessed for the repayment of mortgage. S. Cash dividends of $78,000 were declared and paid at the end of the fiscal year. Instructions INANCE (a) Compare and contrast the direct method and the indirect method for reporting cash flows from operating activities Exercises 143 (b) Prepare a statement of cash flows for Guas Inc. for the year ended May 31, 2017, using the direct method. Support the statement with appropriate calculations, and provide all required disclosures. (e) Using the indirect method, calculate only the net eash low from operating activities for Guas Inc. for the year ended May 31, 2017 (d) Does Guas Inc. have a choice in how it classifies dividends paid on the statement of cash flows? (e) Assume that you are a shareholder of Guas Inc. What do you think of the dividend payout ratio that is highlighted in the statement of cash flows