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McKillop Corporation, a private corporation following ASPE, prepared the following income statement and comparative balance sheet for the year ended December 31, 2020: MCKILLOP CORPORATION

McKillop Corporation, a private corporation following ASPE, prepared the following income statement and comparative balance sheet for the year ended December 31, 2020:

MCKILLOP CORPORATION

Comparative Balance Sheet

December 31, 2020

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Assets

20202019

Cash..............................................................................................$ 74,700$ 35,000

Accounts receivable......................................................................104,00067,000

Inventory........................................................................................100,000112,000

Prepaid expenses..........................................................................32,00036,000

Long-term investments..................................................................81,00066,000

Property, plant, and equipment.....................................................235,000175,000

Accumulated depreciation.............................................................(65,000)(60,000)

Total........................................................................................$561,700$431,000

Liabilities and Shareholders' Equity

Accounts payable..........................................................................$93,000$75,000

Income taxes payable...................................................................29,00024,000

Bonds payable...............................................................................135,000160,000

Common shares............................................................................240,00091,000

Retained earnings.........................................................................64,70081,000

Total........................................................................................$561,700$431,000

MCKILLOP CORPORATION

Income Statement

Year Ended December 31, 2020

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Sales..............................................................................................$500,000

Expenses

Cost of goods sold..................................................................$295,000

Operating expenses...............................................................65,000

Depreciation expense............................................................17,000

Interest expense.....................................................................18,000

Loss on sale of equipment.....................................................3,000398,000

Income before income tax.............................................................102,000

Income tax expense......................................................................15,300

Profit..............................................................................................$86,700

Page 14

Additional information regarding the 2020 fiscal year:

1.New equipment costing $85,000 was purchased for cash.

2.Old equipment costing $25,000 was sold for $10,000 cash when the carrying amount (net book value) was $13,000.

3.Bonds were originally issued at face value. Bonds with a face value of $25,000 were converted into $25,000 of common shares during the year.

4.Cash dividends were declared and paid during the year.

Instructions:

Prepare Cash Flow Statement for the year ended December 31, 2020 using the indirect method.

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