Flounder Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2020: FLOUNDER INC. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Goodwill Total assets 2020 $52,735 58,040 40,050 5,240 156,690 (35,240) 18,000 $295,515 2019 $25,050 51,080 60,060 4,120 130,100 (25,120) 58,000 $303,290 Accounts payable Income tax payable Salaries and wages payable Short-term loans payable Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity $46,290 4,050 8,050 8,040 58,000 130,000 41,085 $295,515 $40,100 6,060 4,050 10,080 77,000 130,000 36,000 303,290 FLOUNDER INC. Income Statement Year Ending December 31, 2020 Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense Impairment loss-goodwill Gain on disposal of equipment Income before income tax Income tax expense Net income $347,925 165,000 182,925 120,000 62,925 $12,200 40,000 (3,100) 49,100 13,825 4,140 $9,685 Additional information: 1. 2. 3. Dividends on common shares in the amount of $4,600 were declared and paid during 2020. Depreciation expense is included in operating expenses, as is salaries and wages expense of $73,500. Equipment with a cost of $36,000 that was 70% depreciated was sold during 2020. Flounder Inc Statement of Cash Flows (Direct Method) For the Year Ended December 31, 2020 Cash Flows from Operating Activities Cash Received from Customers $ |