Financial statements for Discovery Company follow: DISCOVERY COMPANY Statement of Financial Position As of 31 December 22x4 22x3 Current assets: Accounts receivable Inventory Total current assets Land $ 25, se 695,980 567. see 1,288,788 473, 120 2,379, 180 (1,213,780) 125,600 $ 3,652,800 $ 21,820 667,780 519, se 1,288, 520 224,5ae 1,648,480 (1,197,280) 132, 320 $ 1.996,52e $ $ Plant and equipment Less: Accumulated depreciation Patents Total assets Liabilities and shareholders equity Liabilities: Current liabilities: Accounts payable Salaries and wages payable Income tax payable Total current liabilities Long-term debt Total liabilities Sharcholders' cquity: Common shares, no par Retained earnings Total shareholders' equity Total liabilities and shareholders' cquity 391,920 61,82e 144, see 598, 280 1,499, 100 2,897,380 431,280 5 7,380 135. lee 623, 68e 811, se 1,434,62e 247, see 245.42e 955. see 561.920 $ 1.995. see 5,843,320 DISCOVERY COMPANY Statement of Comprehensive Income For the year ended 31 December 20x4 Sales revenue Less expenses: Cost of goods sold $ 2,782, ese Selling and administrative expenses 742,88 Depreciation and amortization 252, 280 Rent 2e, see Miscellaneous expenses 194, 18e Total expenses Other revenues and expenses: Interest expense 47,380 Gain on sale of equipment (8,180) Loss on debt retirement 14,920 Earnings before income tax Income tax expense Net earnings and comprehensive income 3,991,620 54,128 997.6ee $ 573.000 Additional information: a. The company sold equipment that had an original cost of $397,800 and a net book value of $168.800. Other equipment was purchased for cash. Patent amortization was $5,400. b. Long-term debt with a face value of $540,000 was repaid during the year and other long-term debt was issued at a lower interest rate c. The company issued shares for land during the period. Other common shares were retired (bought back and cancelled) at book value. d. Assume unexplained changes in accounts stem from logical transactions. Required: 1. Prepare the SCF, using the indirect method. Use the two-step method for operations. (Deductible amounts and Cash outflows should be Indicated with minus sign.)