DROPAFIX INC. Statement of Financial Position June 30, 2020 June 30 Assets 2020 2019 Cash $ 20,000 $ 38,000 Accounts receivable 86,000 74,000 Inventory 103,000 102,000 Prepaid expenses 2,000 6,000 FV-OCI investments 47,000 45,000 Equipment 173,000 159,000 Accumulated depreciation-equipment (35,000) (25,000) Total $396,000 $399,000 Liabilities and Shareholders' Equity Accounts payable $ 115,000 $100,000 Income tax payable 2,000 3,000 Dividends payable 5,000 0 Long-term notes payable 84,000 119,000 Common shares 31,000 24,000 Retained earnings 148,000 144,000 Accumulated other comprehensive income 11,000 9,000 Total $396,000 $399,000 DROPAFIX INC. Statement of Comprehensive Income For the Year Ended June 30, 2020 Net sales $323,000 Cost of goods sold 175,000 Gross profit 148,000 Operating expenses 120,000 Income from operations 28,000 Interest expense 9,000 Income before income tax 19,000 Income tax 6,000 Net income 13,000 Other comprehensive income Unrealized gain or loss-OCI 2,000 Comprehensive income $ 15,000 Additional information: 1. 2. 3. Dropafix follows IFRS. Assume that interest is treated as an operating activity for purposes of the statement of cash flows. Operating expenses include $10,000 in depreciation expense. There were no disposals of equipment during the year. Common shares were issued for cash. During the year, Dropafix acquired $8,000 of equipment in exchange for long-term notes payable. 4. 5. During the year, equipment with a cost of $8,000 was purchased in exchange for a note payable. (c) From the perspective of a creditor holding several of the long-term notes in substantial amounts owed by Dropafix, how do you view the cash management demonstrated by Dropafi LINK TO TEXT LINK TO TEXT