Presented below is the comparative balance sheet for Carla Vista Inc, a private company reporting under ASPE, at December 31, 2021, and 2020: CARLA VISTA INC. Balance Sheet December 31 Assets 2021 2020 Cash $66,900 $98,000 75,000 101,000 205,000 155.500 Accounts receivable Inventory Long-term investment Property, plant, and equipment Less: Accumulated depreciation 101,500 0 535,000 460,000 (162,500) (140,000) $846,900 $648,500 $57,500 $47.000 6,000 0 Liabilities and Shareholders' Equity Accounts payable Dividends payable Income tax payable Long-term notes payable Common shares Retained earnings 14,000 15,000 25,000 0 630,000 525,000 114.400 61,500 $846,900 $648,500 CARLA VISTA INC. Income Statement Year Ended December 31, 2021 Sales $662,900 432,000 230,900 Cost of goods sold Gross profit Operating expenses Loss on sale of equipment Profit from operations $147,500 3,000 150.500 80,400 Interest expense 3.000 (4.500) (1,500) Interest revenue Profit before income tax 81,900 Income tax expense 14,000 Profit $67,900 1. 3. 4. Additional information: Cash dividends of $15,000 were declared. 2. A long-term investment was acquired for cash at a cost of $101,500. Depreciation expense is included in the operating expenses. The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment. Equipment that originally cost $30,000 was sold during the year for cash. The equipment had a carrying value of $9,000 at . the time of sale. The company issued a note payable for $28,000 and repaid $3,000 by year end. 7. All purchases of inventory are on credit. 5. 6. 8. Accounts Payable is used only to record purchases of inventory. CARLA VISTA INC. Cash Flow Statement - Indirect Method Year Ended December 31, 2021 Operating Activities Profit 67900 Adjustments to reconcile profit to Net Cash Provided by Operating Activities Depreciation Expense $ Loss on Sale of Equipment Increase in Accounts Receivable Increase in Inventory Increase in Accounts Payable