Please explain further the questions and answer why does a decrease in AP, cause net income to decrease and vice versa increase in AP = increase in NI

7. On January 28, 2021, management settled a dispute with the union of its factory workers. A strike had started on November 14, 2020. A portion of the settlement involved a lump sum payment to each worker in lieu of a retroactive adjustment in pay rate dating back to the beginning of the strike. Janix prepares financial statements in accordance with IFRS. Instructions For each item above, indicate whether the event relates to a provision, contingency, commitment, or subsequent event, and explain the appropriate accounting treatment. If no adjustment or disclosure is required, explain why. E5.14 LO 8,9) (Preparation of Statement of Cash Flows) A comparative statement of financial position for Carmichael Industries Inc. follows: Carmichael Industries Inc. Statement of Financial Position December 31, 2020 December 31 Assets 2020 2019 Cash $ 21,000 $ 34,000 Accounts receivable 104,000 54,000 Inventory 220,000 189,000 Land 71,000 110,000 Equipment 260,000 200,000 Accumulated depreciation--equipment (69,000) (42,000) Total $607,000 $545,000 Liabilities and Shareholders' Equity Accounts payable $ 52,000 $ 59,000 Bonds payable 150,000 200,000 Common shares 214,000 164,000 Retained earnings 191,000 122,000 Total $607,000 $545,000 Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $129,000. 2. Cash dividends of $60,000 were declared and paid. Dividends paid are treated as financing activities. 3. Bonds payable amounting to $50,000 were retired through issuance of common shares. 4. Land was sold at a gain of $5,000. 5. No equipment was sold during the year. Instructions a. Prepare a statement of cash flows using the indirect method along with any necessary note disclosure. b. Comment in general on the results reported in the statement of cash flows. E5.15 LO 7) (Statement of Cash Flows-Classifications) The major classifications of activities din the statement of cash flows are onerating in wasting and ework Ch 5, acct205 12thed - Saved to this PC Search out Review View Add-ins Help Acrobat References Mailings EXERCISE 5.14 int a. Carmichael Industries Inc./ Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from operating activities Net income $129,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $27,000 Gain on disposal of land (5,000) Increase in accounts receivable (50,000) Increase in inventory (31,000) Decrease in accounts payable (7,000) (66,000) Net cash provided by operating activities 63,000 Cash flows from investing activities Purchase of equipment (60,000) I Proceeds from sale of land 44,000 Net cash used by investing activities (16,000) Cash flows used by financing activities Payment of cash dividends (60.000)** Net cash used by financing activities (60,000) Net decrease in cash (13,000) Cash at beginning of year 34.000 Cash at end of year $21,000 Note: During the year, Carmichael retired $50,000 in bonds payable by issuing common shares. * ($110,000 - $71,000 + $5,000 gain) = $44,000