Question #1 (35 marks) 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. b. 10 marks Prepare CFO using the DIRECT method. Cash received from customers Cash Disbursements For: Purchases Rent Wages OPE Total disbursements CFO c. 4 marks Find the total amount debited to the cash account. Find the total amount credited to the cash account. Now calculate the cash balance at the end of January. d. 10 marks Prepare B/S as of January 31, 2018 Assets Liabilities and Equity 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.