Question 1 Digiread Technologies Ltd. (DTL) is a privately held distributor of e-raders and tablets, The Calgary-based company is well established and is currently managed by its founder, Erin Jacobs. The company's finandial statements are presented below, together with some additional information. DIGIREAD TECHNOLOGIES LTD. For the Year Ended December 31, 2020 $52,520,000 35,776,00D 10,744,0OD 4,160,000 1,248,000 1,976,000 1,664,000 Sales revenue Cost af gnods sold Gross profit Wages expense Depreciation experise Interest expense income tax expense Gain on sale of 624,000) Net income $8,320,000 DIGIREAD TECHNOLOGIES LTD. As at December 31 Current assets: Accounts receivable (net) Inventory $16,120,000 8,840,000 11,960,000 16,120,000 17,576,000 19,760,000 Total current assets 45,556,000 40,976,000 31,200,000 (6,864,000) (6,656,000) $79,768,000 69,264,000 Accumulated depredation, equipment Tolal Assets Liabilities and shareholders equity Current liabilities: Accounts payable $12,376,000 7,280,000 1,248,00D 1,040,000 '13,624,000 ,320,000 21,340,000 27,040,000 14,500,0OD3o o 29,744,000 24,544,000 Total liabilities and shareholders' equity $79,768,000 $69,264,000 Wages payable Total current liabilities Bonds payable Common shares Retained earning Other Selected Financial Information for the Year Ended December 31, 2020 1. Total sales in 2020 were consistent with the prior year's, and the company's dividend policy has remained consistent tor the past tive years. 2. During 2020, DTL sold a piece of equipment for 52, 184,000. The equipment had originally cost2,600 000 ard had a net carrying arnuunt u 1,560,000 at the time of 3. On August 1, 2020, DTL's board of directors approved the retirement of bonds with a carrying amount $5,200,000 through the issuance of common shares. (a1) DTLs management shareholders have asked you to prepare the statement of cash flows for DTL using indirect method for detenmining cash flows from operating activities. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in sale. parenthesis e.g. (15,000).) DIGIREAD TECHNOLOGIES LTD. Statement of Cash Flows, Indirect Method For the Year Ended December 31, 2020 Cash Flows from Operating Activities Net Income Depreciation Expense Gain on Sale of Equipment Decrease in Accounts Receivable Decrease in Inventories Increase in Wages Payable Increase in Accounts Payable Net Cash Provided by Operating Activities v 8320000 1248000 (624000) 4160000 2184000 208000 5096000 15496000 Cash Flows from Investing Activities Proceeds from the Sale of Equipment v Purchase of Equipment Net Cash Used for Investing Activities Cash Flows from Financing Activities Dividend Paid Net Cash Used for Financing Activities Net Change in Cash 2184000 Ending Cash Opening Cash Net Change in Cash Supplemental Cash Flow information Cash paid for interest Cash paid for income tax During the year, the company's board of directors approved the retirement of bonds with a carrying amount of $ through the issuance of common shares
