Question B: Statement of Cash Flows (13 marks; 23 minutes) The following unclassified statement of financial position relates to Lobo Inc. as at December 31: 2019 LOBO INC. Comparative Statement of Financial Position December 31 2020 Assets Cash in bank $ 111,000 Accounts receivable, net 230,000 Inventories, at cost 190,000 Prepaid expenses 34,700 Land 60,000 Plant and equipment, net 325,000 Total assets $950.700 $ 120,000 303,000 160,000 0 72,500 253,500 $909.000 Liabilities and Shareholders' Equity Accounts payable Accrued liabilities Dividends payable Bonds payable, net Common shares Retained earnings Total liabilities and shareholders' equity $100,000 21,700 38,000 103,000 600,000 88,000 $950.700 $ 40,000 30,000 0 105,000 600,000 134,000 $909.000 Lobo's condensed statement of earnings for the year ended December 31, 2020 showed the following information. n Question B: Statement of Cash Flows (13 marks; 23 mipus mo 2:28:43 The following unclassified statement of financial position relate as at December 31: 2019 LOBO INC. Comparative Statement of Financial Position December 31 2020 Assets Cash in bank $ 111,000 Accounts receivable, net 230,000 Inventories, at cost 190,000 Prepaid expenses 34,700 Land 60,000 Plant and equipment, net 325,000 Total assets $950.700 $ 120,000 303,000 160,000 0 72,500 253,500 $909.000 Liabilities and Shareholders' Equity Accounts payable Accrued liabilities Dividends payable Bonds payable, net Common shares Retained earnings Total liabilities and shareholders' equity $100,000 21,700 38,000 103,000 600,000 88.000 $950.700 $ 40,000 30,000 0 105,000 600,000 134,000 $909.000 Lobo's condensed statement of earnings for the year ended December 31, 2020 showed the following information. LOBO INC. Statement of Earnings For the Year Ended December 31, 2020 Net sales Cost of sales Gross profit Operating expenses, including depreciation of $60,000 Interest expense Gain on sale of land Earnings (loss) before income tax Income tax recovery $1,560,000 (925,000 635,000 (664,000) (8,000) 25,000 (12,000) 4,000 MacBook Air Hockdown Lobo's condensed statement of showed the following information, LOBO INC. Statement of Earnings For the Year Ended December 31, 2020 Net sales Cost of sales Gross profit Operating expenses, including depreciation of $60,000 Interest expense Gain on sale of land Earnings (loss) before income tax Income tax recovery Net earnings (loss) $1,560,000 (925,000 635,000 (664,000) (8,000) 25,000 (12,000) 4,000 $ (8.000) Additional information: a) The land that was sold during the year had an original cost of $12,500. b) Equipment was acquired in 2020, and no disposals were made during the year. Required: 1. Prepare, in good form, the operating activities section of the statement of cash flows for the year ended December 31, 2020. Use the indirect method and show all relevant calculations. Do NOT prepare a complete statement of cash flows. (6 marks) 2. Calculate the amount of cash payments to suppliers of merchandise. The accounts payable relate only to purchases of merchandise for sale. (3 marks) 3. Prepare the investing activities section of the statement of cash flows for the year 2020. (4 marks)
