don't forget question b

Problem 5-11 a A comparative statement of financial position for Ayayai Corporation follows: AYAYAI CORPORATION Statement of Financial Position December 31 Assets 2020 2019 Cash $75,400 $33,640 Accounts receivable 100,920 68,440 Inventory 154,280 93,960 FV-OCI investments in shares 73,080 97,440 Land 75,400 119,480 Equipment 452,400 498,800 Accumulated depreciation-equipment (135,720) (99,760) Goodwill 143,840 200,680 Total $939,600 $1,012,680 Liabilities and Shareholders' Equity Accounts payable $13,920 $59,160 Dividends payable 17,400 37,120 Notes payable 255,200 388,600 Common shares 307,400 145,000 Retained earnings 334,080 329,440 Accumulated other comprehensive income 11,600 53,360 Total $939,600 $1,012,680 Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $22,040. 2. In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different plot of land with original cost of $99,760 was sold for proceeds of $110,200. 3. In April 2020, notes payable amounting to $162,400 were retired through the issuance of common shares. In December 2020, notes payable amounting to $29,000 were issued for cash. Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $22,040. 2. In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different plot of land with original cost of $99,760 was sold for proceeds of $110,200. 3. In April 2020, notes payable amounting to $162,400 were retired through the issuance of common shares. In December 2020, notes payable amounting to $29,000 were issued for cash. 4. FV-OCI investments were purchased in July 2020 for a cost of $17,400. By December 31, 2020, the fair value of Ayayai's portfolio of FV-OCI investments decreased to $73,080. No FV-OCI investments were sold in the year. 5. On December 31, 2020, equipment with an original cost of $46,400 and accumulated depreciation to date of $13,920 was sold for proceeds of $24,360. No equipment was purchased in the year. 6. Dividends on common shares of $37,120 and $17,400 were declared in December 2019 and December 2020, respectively. The 2019 dividend was paid in January 2020 and the 2020 dividend was paid in January 2021. Dividends paid are treated as financing activities. 7. A loss on impairment was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year. (a) Prepare a statement of cash flows using the indirect method for cash flows from operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) AYAYAI CORPORATION Statement of Cash Flows For the Year Ended December 31, 2020 During the year, Spencer retired $140,000 in notes payable by issuing common shares. Spencer Corporation Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Net income $19,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $43,000 Loss on disposal of equipment 7,000 Gain on disposal of land (9,000) Loss on impairment 49,000 Increase in accounts receivable (28,000) Increase in inventory (52,000) Decrease in accounts payable (39,000) (29,000) Net cash used by operating activities (10,000) Cash flows from investing activities Purchase of Fair Value-OCI investments (15,000) Proceeds from sale of equipment 21,000 Purchase of land (48,000) Proceeds from sale of land 95,000 Net cash provided by investing activities 53,000 Cash flows used by financing activities Payment of cash dividends (32,000) Issuance of notes payable 25,000 Net cash used by financing activities (7,000) Net increase in cash 36,000 Cash at beginning of year 29,000 Cash at end of year $65,000 (b) From the perspective of a shareholder, comment in general on the results reported in the statement of cash flows. A comparative statement of financial position for Ayayai Corporation follows: AYAYAI CORPORATION Statement of Financial Position December 31 Assets 2020 2019 Cash $75,400 $33,640 Accounts receivable 100,920 68,440 Inventory 154,280 93,960 FV-OCI investments in shares 73,080 97,440 Land 75,400 119,480 Equipment 452,400 498,800 Accumulated depreciation-equipment (135,720) (99,760) Goodwill 143,840 200,680 Total $939,600 $1,012,680 Liabilities and Shareholders' Equity Accounts payable $13,920 $59,160 Dividends payable 17,400 37,120 Notes payable 255,200 388,600 Common shares 307,400 145,000 Retained earnings 334,080 329,440 Accumulated other comprehensive income 11,600 53,360 Total $939,600 $1,012,680 Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $22,040. 2. In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different plot of land with original cost of $99,760 was sold for proceeds of $110,200. 3. In April 2020, notes payable amounting to $162,400 were retired through the issuance of common shares. In December 2020, notes payable amounting to $29,000 were issued for cash. 4. FV-OCI investments were purchased in July 2020 for a cost of $17,400. By December 31, 2020, the fair value of Ayaya's portfolio of FV-Oci investments decreased to $73,080. No FV-OCI investments were sold in the year. 5. On December 31, 2020, equipment with an original cost of $46,400 and accumulated depreciation to date of $13,920 was sold for proceeds of $24,360. No equipment was purchased in the year. 6. Dividends on common shares of $37,120 and $17,400 were declared in December 2019 and December 2020, respectively. The 2019 dividend was paid in January 2020 and the 2020 dividend was paid in January 2021. Dividends paid are treated as financing activities 7. A loss on impairment was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year. (a) Prepare a statement of cash flows using the Indirect method for cash flows from operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) AYAYAI CORPORATION Statement of Cash Flows For the Year Ended December 31, 2020 During the year, Spencer retired $140,000 in notes payable by issuing common shares. $19,000 Spencer Corporation Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $43,000 Loss on disposal of equipment 7,000 Gain on disposal of land (9,000) Loss on impairment 49,000 Increase in accounts receivable (28,000) Increase in inventory (52,000) Decrease in accounts payable (39,000) Net cash used by operating activities Cash flows from investing activities Purchase of Fair Value-ci investments (15,000) Proceeds from sale of equipment 21,000 Purchase of land (48,000) Proceeds from sale of land 95,000 Net cash provided by investing activities Cash flows used by financing activities Payment of cash dividends (32,000) Issuance of notes payable 25,000 Net cash used by financing activities Net increase in cash Cash at beginning of year Cash at end of year (29,000) (10,000) 53,000 (7,000) 36,000 29,000 $65,000 (b) From the perspective of a shareholder, comment in general on the results reported in the statement of cash flows