Question 1: [5 marks]

Presented below is an income statement for Naser Company for the year ended December 31, 2020.

Naser Company Income Statement For the Year Ended December 31, 2021

Net sales $750,000 Costs and expenses: Cost of goods sold 440,000 Selling, general, and administrative expenses 70,000 Other Income & Expenses 15,000 Income before income taxes 225,000

Additional information:

1. "Selling, general, and administrative expenses" included a charge of $5,000 for loss on sale of furniture.

2. " Other Income & Expenses " consisted of the following items, all before tax:

interest expense $6,000, a discontinued operations loss of $18,000, and rent revenues $39,000

3. Tax rate 15%

4. Naser had 100,000 ordinary shares outstanding during 2021.

Instructions Prepare a corrected income statement, including the appropriate per share disclosures. Then answer the following questions.

#	Question	Answer
1	Income from operations for 2021, is:
2	Income before income tax for 2021, is:
3	Income tax for 2021, is:
4	Income from continuing operations for 2021, is:
5	Net income for 2021, is:

Naser Company Income Statement For the Year Ended December 31, 2021

Question 3: [5 marks]

Presented below is the income statement of Amman Inc. for 2021:

Sales $380,000

Cost of goods sold 225,000

Gross profit $155,000

Operating expenses 85,000

Income before income taxes 70,000

Income taxes 28,000

Net income $ 42,000

Notes:

• Operating expenses includes depreciation expense for the year for $16,700
• Income taxes amount include $ 6000 related to financing 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 information related balances of current assets and current liabilities shown in statement of financial position as follows:

	31/12/2020	31/12/2021
Cash	12000	24000
Account receivable	15000	30000
Prepaid Insurance.	20000	25000
Inventories	29400	10000
Accounts payable	20000	33000

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
Amman Inc. Statement of Cash Flows (Indirect Method)