Kitts Ltd. has recently decided to go public and has hired you as their independent accountant. They wish to adhere to IFRS and know that they must prepare a statement of cash flows. Their financial statements for 2020 and 2019 are provided below:

Statements of Financial Position

Dec 31/2020 Dec 31/2019

Cash............................................. $ 51,000 $ 24,000

Accounts receivable........................ 45,000 27,000

Merchandise inventory.................... 48,000 60,000

Property, plant and equipment.......... $ 76,000 $ 120,000

Less accumulated depreciation.... (40,000) 36,000 (38,000) 82,000

Total Assets $ 180,000 $ 193,000

Accounts payable............................ $ 17,000 $ 12,000

Income taxes payable..................... 34,000 44,000

Dividends payable 2,000 -0-

Deferred income tax liability 10,000 5,000

Bonds payable................................ 50,000 80,000

Unamortized bond discount. (2,000) (5,000)

Common shares............................. 27,000 27,000

Retained earnings........................... 42,000 30,000

Total Liabilities & Shareholders Equity $ 180,000 $ 193,000

Statement of Comprehensive Income

Year ended December 31, 2020

Sales........................................................................................... $ 1,050,000

Cost of sales................................................................................ 894,000

Gross profit.................................................................................. 156,000

Selling and administrative expenses................................................ 99,000

Income from operations................................................................ 57,000

Interest expense.......................................................................... 9,000

Income before taxes..................................................................... 48,000

Income taxes............................................................................... 12,000

Net income.................................................................................. $ 36,000

The following additional data were provided for the year ended December 31, 2020:

1. Dividends were declared.

2. Equipment was sold for $30,000. This equipment originally cost $ 44,000, and had accumulated depreciation of $8,000 at the time of sale. Any gains, losses or other expenses not separately disclosed are included in selling and administrative expenses.

3. Bonds were retired during the year for proceeds equal to their carrying value. The unamortized discount associated with the bonds redeemed was $2,000.

Required #1:

From the information above, prepare, in good form, a Statement of Cash Flows under the direct method to the extent the information provided permits all disclosures, for the year ended December 31, 2020. Show supporting calculations only in area indicated; not in the body of the good form presentation.

Kitts Limited

Statement of Cash Flows For the Year ended December 31, 2020

Supporting calculations:

Required #2:

Prepare, in good form, the cash from operations only under the indirect method of presentation. Kitts Limited wishes to disclose any separate disclosures as regards interest and taxes in the body of the cash flow from (used in) operations sections and not as a separate disclosure. Show any supporting calculations in the area indicated, not in the body of the good form presentation.

Kitts Limited

Statement of Cash Flows (Operations Only) For the Year ended December 31, 2020

Supporting calculations: