Other information for the year ended December 31, 2020 which may be useful includes: a. Acquired equipment by issuing a long-term note payable, $76,500, and paying $5,000 cash. b. Purchased a long-term investment for cash. c. Received cash for issuance of common shares, $40,000. d. Only cash dividends were issued during the year. e. Paid short-term note payable by issuing common shares. Required 1. Prepare Gariepy Wholesale Ltd.'s operating section of the cash flow statement for the year ended December 31, 2020, using the indirect method. All current accounts, except short-term note payable, result from operating transactions. 2. Describe how the direct method would differ from the partial statement you created in Requirement 1. 2 3 Preparing the operating section of the cash flow statement-indirect method $1,327,000 402,000 925,000 GARIEPY WHOLESALE LTD. Income Statement For the Year Ended December 31, 2020 Net sales Cost of goods sold Gross margin Operating expenses Salaries expense $194,000 Amortization expense 27,000 Other expenses 210,000 Operating income Other revenues and expenses Revenues and gains Interest revenue Expenses and losses Interest expense (30,500) Loss on sale of land (33,500) Income before income taxes Income tax expense Net income 431,000 494,000 53,000 (64,000) 483,000 49,500 $ 433,500 P17-2B Gariepy Wholesale Ltd.'s comparative balance sheet at December 31, 2020, and its 2020 income statement are as follows: 2019 GARIEPY WHOLESALE LTD. Balance Sheet December 31, 2020 and 2019 Assets 2020 Current assets Cash $ 188,000 Accounts receivable 370,000 Interest receivable 14,500 Inventory 343,000 Prepaid expenses 18,500 Long-term investment 50,500 Plant and equipment, net 422,500 Land 212,000 Total assets $1,619,000 Liabilities Current liabilities Note payable, short-term $ 67,000 Accounts payable 234,500 Income tax payable 69,000 Accrued liabilities 41,000 Interest payable 18,500 Salaries payable 4,500 Long-term note payable 237,000 Shareholders' Equity Common shares 319,500 Retained earnings 628,000 Total liabilities and shareholders' equity $1,619,000 $ 43,000 241,500 18,000 301,000 14,000 26,000 368,000 480,000 $1,491,500 $ 90,500 201,500 72,500 48,500 14,500 13,000 470,500 256,000 324,500 $1,491,500