Flounder Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows and follows the policy of classifying interest paid as operating cash flows and dividends paid as financing cash flows. The comparative statement of financial position and income statement for Flounder as of May 31, 2020, are as follows: FLOUNDER INC. Statement of Financial Position As at May 31 Current assets Cash Accounts receivable 2019 $20,850 56,600 200,000 7,820 Inventory Prepaid expenses Total current assets 2020 $34,830 81,800 188,760 9,110 314,500 598,500 154,850 443,650 $758,150 285,270 Plant assets Less: Accumulated depreciation Net plant assets 507,500 122,850 384,650 Total assets $669,920 Current liabilities Accounts payable Salaries and wages payable Interest payable Total current liabilities Mortgage payable Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $120,000 60,880 26,060 206,940 80,830 287,770 $116,000 72,820 23,600 212,420 106,000 318,420 335,920 134,460 470,380 $758,150 280,000 71,500 351,500 $669,920 $ 1,340,270 808,000 532,270 FLOUNDER INC. Income Statement For the Year Ended May 31, 2020 Sales Cost of goods sold Gross margin Expenses Salaries and wages expense Interest expense Other operating expenses Depreciation expense Total operating expenses Operating income Income tax expense Net earnings 203,000 65,800 23,600 32,000 324,400 207,870 66,400 141,470 $ The following is additional information about transactions during the year ended May 31, 2020, for Flounder Inc., which follows IFRS. 1. 2. 3. Plant assets costing $91,000 were purchased by paying $54,000 in cash and issuing 5,000 common shares. The "other expenses" relate to prepaid items. In order to supplement its cash, Flounder issued 4,000 additional common shares. There were no penalties assessed for the repayment of the mortgage. Cash dividends of $78,510 were declared and paid at the end of the fiscal year. 4. 5. Prepare a statement of cash flows for Flounder Inc. for the year ended May 31, 2020, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000).) Prepare a statement of cash flows for Flounder Inc. for the year ended May 31, 2020, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Flounder Inc. Statement of Cash Flows (Direct Method) $ 4 $ 4 $