Edward Rashleigh is a corporate accountant with Noble Inc., a small independent book publisher and retailer. Noble has a small storefront and operates an e-commerce site. Edward joined Noble in July of 2020 and is preparing the company's year-end financial statements in accordance with ASPE. He has been asked to prepare the cash flow statement using the direct method. Edward has prepared the following: Appendix I, balance sheet Appendix II, income statement Appendix III, excerpts from the notes to the financial statements Complete the task in the Excel Task file. Appendix I: Balance sheet Noble Inc. Balance sheet As at December 31 2019 Prior year 2020 Current year Draft - prepared by management Audited ASSETS Current assets: Cash Accounts receivable Inventory Prepaid expenses $ 2,406 379,802 283,906 26,744 692,858 840,250 $1,533,108 $ 17,635 244,477 195,632 30,611 488,355 914,355 $1,402,710 Property, plant, and equipment (net) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Income taxes payable Current portion of term bank loan Term bank loan $ 377,220 402 28,000 405,622 658,000 1,063,622 13,000 456,486 $1,533,108 $ 572,604 11,200 28,000 611,804 686,000 1,297,804 13,000 91,906 $1,402,710 Share capital Retained earnings Appendix II: Income statement Noble Inc. Income statement For the year ending December 31 2019 Prior year 2020 Current year Draft prepared by management Audited Sales Cost of sales Gross profit $ 2,791,275 1,596,238 1,195,037 $ 2,205,030 879,658 1,325,372 Expenses Advertising and promotion Amortization Automobile Insurance Interest Office Professional fees Property taxes Rent Repairs and maintenance Salaries and wages Travel 27,122 174,105 45,358 24,741 80,966 9,267 4.221 12,895 36,000 4,336 351,854 9,123 779,988 415,049 45,469 $ 369,580 40,663 249,866 49,106 20,122 93,488 9,422 15,060 11,020 36,000 10,535 363,040 9,058 907,380 417,992 34,088 $ 383,904 Income before taxes Income taxes Net income Appendix III: Excerpts from the notes to the financial statements Capital assets 2020 2019 Net Net Cost Accumulated book book amortization value value Land 50,000 50,000 Equipment 927,630 312,700 614,930 729,035 Computers and software 410,650 235,330 175,320 185,320 1,388,280 548,030 840,250 914,355 During the year, the company sold a small mechanical printing press for $40,000 with a net book value of $40,000. It used the proceeds of the sale to purchase a new automated press for $90,000. As the new press was purchased in mid- December and was not operational until December 31, no amortization was taken during the year. All purchases and sales of capital assets during 2020 affected cash. Long-term debt The company has agreed to pay the Regal Bank of Canada $28,000 in principal repayments each year at December 31. Additional principal repayments can be made at the company's request
