Question 1: 15 marks Presented below is the income statement of Grand Stores, Inc for 2020: Sales $560,000 Cost of goods sold ( 420.000) Gross profit $140,000 - Operating expenses (60.000) Income before taxes 80,000 - Income taxes 30% ( 24.000) Net income $ 56,000 Notes related to 2020: Operating expenses includes depreciation expense for the year for $7,000. Income taxes amount include $ 3000 related to Investing activities. The company does not include any interest or dividend cash flows in the operating section of the statement of cash flows. In addition, the following Statement of financial position as follows: 31/12/2019 31/12/2020 Assets Cash 10,000 15.000 Treasury Bills (Maturity 70 days) 8.000 10.000 Accounts receivable 20.000 46,000 Prepaid Insurance 5.000 3.000 Inventories 30,000 21.000 Property. Plant & Equipment (net) 40.000 30,000 Total assets 113.000 125.000 Liabilities and Owners Equity Accounts payable 16.000 21.000 Interest expense payable 8.000 0 Long-term Loan 33.000 22.000 Share Capital - Ordinary 20,000 27,000 Retained Earings 36,000 55,000 Total liabilities & Owners Equity 113,000 125.000 Instructions Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method Answer Grand Stores, Inc. Statement of Cash Flows (Indirect Method) Cash flows from operating activities