Question 2 (10 marks) PART A Two-year balances of selected accounts of Far East Company appear below: Balance Balance Dec.31, 2020 Dec.31,2021 Cash $31,000 $58,770 Accounts receivable (net) 14,000 12,000 Inventory 40,000 43,000 Property, Plant and Equipment (at cost) 84,000 77,000 Accounts Payable 0 3,200 Income Taxes Payable 1,000 300 Dividend Payable 3,000 3,500 Ordinary shares (par value $25 per share) 250 500 Note Payable 0 5,000 Additional information for 2021: a. Net profit after tax, $16,000. b. Depreciation expense for the year, $5,000. c. Cash dividend declared $4,500. The company has regarded dividend payment as financing activities. d. December 30, 2021, purchased a machine for $10,000; paid half cash and issued a one year, 10%, interest-bearing note of $5,000 for the balance. e. Issued 20 shares of unissued shares at $26 per share for cash. 2 f. Repurchased 10 ordinary shares at $25 per share by cash. g. Sold an equipment (cost $12,000, accumulated depreciation $2,000) for $6,000 cash and incurred a loss of $4,000. h. Compensation gain of $2,000 due to the destruction of an equipment (cost $5,000, accumulated depreciation $1,000); received $6,000 cash settlement from the insurance company. The gain has been included in the income statement. Required: Compile the Statement of Cash Flows for Far East Company using indirect method (You should illustrate the answers using the format specified in Chapter 4, Spiceland). Part B: In your own words, write two statements (complete sentences) that describe the usefulness of the Statement of Cash Flows. (8 marks) (2 marks)