Question #1 (35 marks) The following financial data were given to you by Sophia Gadfly Company Sophia Gadfly Company Comparative Trial Balances At Beginning and End of Fiscal Year Ended January 31, 2020 Feb 1, 2019 Increase Decrease Jan 31, 2020 Debits Cash $ 5,000 $14,400 $ 19,400 A/R 9,500 4,000 13,500 Inventory 30,000 $ 900 29,100 Prepaid insurance 1,200 450 750 LT-investments 12,000 2,000 10,000 Plant and equipment 28,500 12,500 41,000 CGS 53,900 Other expenses 32,200 Loss on disposal of equipment 100 Total S86,200 $199,950 Credits Accumulated depreciation $ 5,000 1,900 $ 6,900 A/P 8,000 500 7,500 ST-NP 0 5,000 5,000

Accrued liability 2,500 2,800 5,300 Unearned revenue 1,000 750 250 LT-NP 30,000 6,000 24,000 C/S 20,000 10,000 30,000 Additional Paid-In Capital 500 11,100 11,600 R/E 19,200 800 18,400 Sales 85,000 Gain on disposal of investments 6,000 Total S86,200 $199,950 The following additional information was available: i. All purchases and sales were on account. ii. Equipment with an original cost of $1,500 was sold for $700. iii. Other expenses included the following: Insurance expired $ 450 Depreciation expense 2,600 Interest expense 1,800 iv. All dividends declared were paid in cash. v. New equipment was acquired; cash, and a six-month note payable in the amount of $5,000 were issued. vi. LT-NP requires the payment of $6,000 per year plus interest until paid. Hints: Dont forget accumulated depreciation in calculating NOA. You must first calculate NI. Required: a. Prepare the statement of cash flows using the INDIRECT method for 2020. 19 marks

b. How much cash was disbursed for other expenses? Now prepare CFO using the DIRECT method for 2020. 8 marks c. Calculate the change in NOA, assuming 50% of cash is considered an operating asset. It is helpful to use the following table: 2020 2019 OA OL NOA Calculate the change in NOA. 8 marks