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Question 1 --/4 The income statement and unclassified statement of financial position for Ivanhoe, Inc. follow: IVANHOE, INC. Statement of Financial Position December 31 Assets

Question 1

--/4

The income statement and unclassified statement of financial position for Ivanhoe, Inc. follow:

IVANHOE, INC. Statement of Financial Position December 31
Assets 2018 2017
Cash $97,200 $48,000
Held for trading investments 122,000 115,000
Accounts receivable 79,500 42,500
Inventory 122,500 95,000
Prepaid expenses 18,100 27,000
Property, plant, and equipment 308,000 284,500
Accumulated depreciation (47,500 ) (52,200 )
Total assets $699,800 $559,800
Liabilities and Shareholders Equity
Accounts payable $98,500 $77,300
Accrued liabilities 11,200 7,300
Bank loan payable 123,100 194,700
Common shares 220,000 155,000
Retained earnings 247,000 125,500
Total liabilities and shareholders equity $699,800 $559,800
IVANHOE, INC. Income Statement Year Ended December 31, 2018
Sales $550,300
Cost of goods sold 189,450
Gross profit 360,850
Operating expenses 116,460
Income from operations 244,390
Other revenues and expenses
Unrealized gain on held for trading investments $7,000
Interest expense (4,750 ) 2,250
Income before income tax 246,640
Income tax expense 44,000
Net income $202,640

Additional information:

1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. An unrealized gain on held for trading investments of $7,000 was recorded.
3. New equipment costing $82,000 was purchased for $24,800 cash and a $57,200 long-term bank loan payable.
4. Old equipment having an original cost of $58,500 was sold for $1,100.
5. Accounts payable relate to merchandise creditors.
6. Some of the bank loan was repaid during the year.
7. A dividend was paid during the year.
8. Operating expenses include $46,700 of depreciation expense and a $6,000 loss on disposal of equipment.

(a) Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $24,800 cash and issuing a $57,200 bank loan payable.

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