Question
Gems Co. uses the indirect method to prepare its statement of cash flows. The following comparative statement of financial position for 2021 and 2022 are
Gems Co. uses the indirect method to prepare its statement of cash flows. The following comparative statement of financial position for 2021 and 2022 are presented:
| At December 31 | ||
| 2022 | 2021 | |
| Property, Plant and Equipment (PPE) | $1 260 000 | $1 050 000 |
| Accumulated depreciation | (450 000) | (375 000) |
| Patent | 153 000 | 174 000 |
| Prepaid expenses | 18 000 | 27 000 |
| Inventory | 150 000 | 180 000 |
| Accounts receivable | 159 000 | 117 000 |
| Cash | 297 000 | 153 000 |
| $1 587 000 | $1 326 000 | |
| Accounts payable | $ 153 000 | $ 168 000 |
| Accrued liabilities | 60 000 | 42 000 |
| Mortgage payable | ---- | 450 000 |
| Share capital-Preference | 645 000 | ----- |
| Share capital-Ordinary | 600 000 | 600 000 |
| Retained earnings | 129 000 | 66 000 |
| $1 587 000 | $1 326 000 | |
Additional Information:
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earnings account has been charged for dividends of $138 000 and credited for the net income for the year.
The statement of profit or loss for 2022 was as follows:
| Sales | $1 980 000 |
| Cost of sales | 1 089 000 |
| Gross profit | 891 000 |
| Operating expenses | 690 000 |
| Net income | $ 201 000 |
Required:
Prepare a statement of cash flows (indirect method) for Gems Co. for the year ended December 31, 2022.
| Gems Co. | ||
| Statement of Cash Flows (Indirect Method) | ||
| For the Year Ended December 31, 2022 | ||
| Cash flows from operating activities | $ | $ |
| Net income | Answer 1 ? | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | Answer 2 ? | |
| Choose Correct Answer: (Gain on sale/Loss on sale/Amortization) | Answer 4 ? | |
| Accounts receivable: Choose Correct Answer: (decrease/increase) | Answer 6? | |
| Inventory: Choose Correct Answer: (decrease/increase) | Answer 8 ? | |
| Prepaid expenses: Choose Correct Answer: (increase/decrease) | Answer 10 ? | |
| Accounts payable: Choose Correct Answer: (increase/decrease) | Answer 12 ? | |
| Accrued liabilities; Choose Correct Answer (decrease/increase) | Answer 14 ? | Answer 15 ? |
| Net cash; Choose Correct Answer (provided/used) by operating activities | Answer 17 ? | |
| Cash flows from investing activities | ||
| Choose Correct Answer: (Purchase/Sale) of PPE | Answer 19? | |
| Net Cash: Choose Correct Answer (used/provided) by investing activities | Answer 21 ? | |
| Cash flows from financing activities | ||
| Choose Correct Answer: (Receipt/Payment) of cash dividend | Answer 23 ? | |
| Choose Correct Answer; (Acquisition/ Retirement) of mortgage payable | Answer 25 ? | |
| Choose Correct Answer: (Purchase/Sale) of preference shares | Answer 27 ? | |
| Net cash: Choose Correct Answer? (provided/used) by financing activities | Answer 29 ? | |
| Net: Choose Correct Answer? (decrease/ increase) in cash | Answer 31 ? | |
| Cash, January 1, 2022 | Answer 32 ? | |
| Cash, December 31, 2022 | Answer 33 ? |
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