coming Evening Example 19.5 Super Sports Co., dealing in sports goods, has an annual sale of Rs.50 lakhs and is currently extending 30 days credit to the dealers. It is felt that sales can pick up considerably if the dealers are willing to carry increased stocks, but the dealers have difficulty in financing their inventory. Super Sports Co. is, therefore, considering shifts in credit policy. The following information is available. The average collection period now is 30 days. Costs. Variable costs 80% sales. Fixed costs Rs.6 lakhs per annum. Required (pre-tax) return on investment 20% Credit policy Average collection Annual sales (Rs Lakhs) A 45 days 56 B 60 days 60 75 days 62 D 90 days 63 Determine which policy the company should adopt. UMLAUF COMPANY UMLAUF COMPANY Income Statement Balance Sheets For Year Ended December 31, 2020 December 31, 2019 and 2020 2019 2020 Sales. $ 446,100 Assets Cost of goods sold S222,300 Cash $ 43,050 $ 23.925 Other operating expenses 120,300 Accounts receivable 34,125 39,825 Depreciation expense.. 25,500 (368.100) Inventory.. 156,000 146,475 78,000 Prepaid expenses. 3,600 1.650 Other gains (losses) Total current assets. 236,775 211,875 Loss on sale of equipment 3,300 Equipment. 135,825 146,700 Loss on retirement of bonds 825 (4.125) Accum. Depreciation-Equipment (61.950) (47.550) Income taxes expense 73,875 Total assets $ 310,650 $ 311,025 Income taxes expense (13.725) Liabilities Net income $ 60,150 Accounts payable. 28,800 33.750 Income taxes payable.. 5,100 4,425 Dividends' payable 0 4,500 Total current liabilities 33,900 42,675 Bonds payable 37,500 Total Liabilities 33,900 80,175 Equity Common stock, $10 per. 168,750 168,750 Retained earnings..... 108.000 62.100 Total liabilities and equity-- 310,650 311.025 Additional Information a. Equipment costing $ 21,375 with accumulated depreciation of $ 11,100 is sold for cash b. Equipment purchases are for cash. c. Accumulated Depreciation is affected by depreciation expense and the sale of equipment d. The balance of Retained Earnings is affected by dividend declarations and net income e. All sales are made on credit. f. All inventory purchases are on credit. g Accounts Payable balances result from inventory purchases. h. Prepaid expenses relate to "other operating expenses". 0 Req: Prepare a cash flow statement using indirect method (with complete computation schedules)