Question 3 The income statement for Crane Ltd., a private company following ASPE, is presented here: CRANE LTD. Income Statement Year Ended November 30, 2018 Sales $8,000,000 Cost of goods sold 4,500,000 Gross profit 3,500,000 Operating expenses 2,070,000 Income from operations 1,430,000 Interest expense 100,000 Income before income tax 1,330,000 Income tax expense 370,000 Net income $960,000 Additional information: 1. 2. 3. 4. Operating expenses include $73,000 of depreciation expense and a $107,000 impairment loss on property, plant, and equipment. Accounts receivable increased by $186,000. Inventory decreased by $51,000. Prepaid expenses related to operating expenses increased by $48,000. Accounts payable to suppliers of merchandise decreased by $180,000. Accrued liabilities related to operating expenses decreased by $90,000. Interest payable decreased by $16,000. Unearned revenue that was received from customers decreased by $15,000. Income tax payable increased by $21,000. 6. 7. 8. 9. CRANE LTD. Statement of Cash Flows (Partial)-Indirect Method Year Ended November 30, 2018 Operating activities Adjustments to reconcile net income to