On January 1, 2018, Safa formed a computer sales and service enterprise in Halifax by investing $90,000 cash. The journal entry on January 1, 2018 was: Cash $90,000 Capital $90,000. The new company, Safa Sales and Service, sells 3 types of products: Ghana computers, Ivory computers, and Togo printers. Safa has the following transactions during January: (i.) Pays $6,000 in advance for 3 months rent of office space. (ii.) Purchases 40 Ghana computers at a cost of $1,500 each, 6 Ivory computers at a cost of $3,000 each, and 25 Togo printers at a cost of $450 each, paying cash upon delivery. (iii.) Sales, repair, and office employees earn $12,600 in salaries during January, of which $3,000 was still payable at the end of January. (iv.) Sells 30 Ghana computers at $2,550 each, 4 Ivory computers for $4,500 each, and 15 Togo printers for $750 each; $75,000 is received in cash in January and $30,750 is sold on deferred payment plan. (That is, $30,750 is yet to be received in cash). (v.) Other operating expenses (OPE) of $8,400 are incurred and paid for during January; $2,000 of incurred expenses in January are payable (accrued liabilities) in February.

The following journal entries are prepared for your convenience: (i.) Prepaid rent $6,000 Cash $6,000 (ii.) Purchases $89,250 Cash $89,250 (iii.) Wages $12,600 Cash $9,600 W/P $3,000 (iv.) Cash $75,000 A/R $30,750 Sales $105,750 (v) OPE $10,400 Cash $8,400 Accrued liability $2,000

Required: a. Calculate CGS. 5 marks. Prepare (an accrual basis) I/S for the month of January. Use the format below: 6 marks Sales $105,750 CGS GP Operating expenses: Rent Wages OPE Total operating expenses NI

Show calculations. [5:57 p.m., 2021-04-15] Amitoj: Please quick [5:58 p.m., 2021-04-15] Amitoj: Question #2 (35 marks) This question consists of two independent sub-questions. 1. 25 marks

B/S Dec. 31 2019 Dec. 31 2018 Cash $ 9,780 $ 4,840 Short-term investment 12,800 11,400 A/R 7,580 4,300 Inventory 12,250 9,285 Prepaid expenses 1,840 2,600 PPE 27,000 24,250 Accumulated depreciation (5,000) (5,200) Total $66,250 $51,475 A/P $ 9,300 $ 7,730 Accrued liabilities 1,150 700 Bank loan payable 11,000 15,000 Common shares 20,000 17,500 R/E 24,800 10,545 Total $66,250 $51,475

I/S for 2019 Sales $49,278 CGS 18,546 Gross profit 30,732 Operating expenses 11,641 Operating income (EBIT) 19,091 Other revenues and expenses: Unrealized gain on ST-investment $1,400 Interest expense (473) 927 Income before tax 20,018 Tax expense 4,500 NI $15,518

Additional information: Prepaid expenses and accrued liabilities relate to operating expenses. An unrealized gain on ST-investment of $1,400 was recorded. A/P relates to purchases of inventory. Operating expenses include $4,650 of depreciation expense and a $750 loss on disposal of equipment.

Required: a. (i) Prepare cash flows from operations, CFO using the INDIRECT method. (9 marks)