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HV QUESTION 4 (15 Marks): Blizzard Inc, a paper manufacturing company that follows ASPE, had the following statements prepared as at December 31, 2017: BLIZZARD

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HV QUESTION 4 (15 Marks): Blizzard Inc, a paper manufacturing company that follows ASPE, had the following statements prepared as at December 31, 2017: BLIZZARD INC. Comparative Statement of Financial Position at December 31 2020 2019 Cash $ 48,625 $ 30,000 Accounts receivable 53,000 51,000 Inventory 48,000 60,000 Prepaid rent 7,500 5,000 Equipment 154,000 130,000 Accumulated depreciation (35,000) (25,000) Goodwill 28,875 50,000 Total assets $305,000 $301,000 Accounts payable $ 40,000 $ 46,000 Income tax payable 7,000 6,000 Salaries and wages payable 8,000 4,000 Short-term notes payable 5,000 10,000 Long-term loans payable 60,000 69,000 Common shares 145,000 130,000 Retained earnings 40,000 36.000 Total liabilities and shareholders' equity $305,000 $301,000 BLIZZARD INC. Income Statement Year Ending December 31, 2020 Sales revenue $365,000 Cost of goods sold 175.000 Gross margin 190.000 Operating expenses 120.000 Operating income 70,000 $ 11,400 Intarse Oyrense Common shares Retained earnings Total liabilities and shareholders' equity 145,000 40,000 $305,000 130,000 36,000 $301,000 BLIZZARD INC. Income Statement Year Ending December 31, 2020 Sales revenue $365,000 Cost of goods sold 175,000 Gross margin 190,000 Operating expenses 120.000 Operating income 70,000 Interest expense $ 11,400 Impairment loss-goodwill 21,125 Gain on sale of equipment (3,200) 29.325 Income before income tax 40.675 Income tax expense 8.135 Net income $ 32,540 Additional information: Depreciation expense is included in operating expenses, as is salaries and wages expense of $69,000. Equipment with a cost of $15,000 that was 60% depreciated was sold during 2020. Additional equipment was acquired during the year, partially paid for by issuing common shares. No common shares were reacquired during the year. REQUIRED: Prepare a statement of cash flows using the indirect method including any note disclosure. -End of Exam-ON

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