Rainbow LTD. Corporation

Comparative Balance Sheet

as at September 31, 2022 and 2021

Assets 2022 2021 Liabilities and Shareholders' Equity 2022 2021

Current Current

Cash and cash equivalents $ 19,000 $ 3,000 Accounts payable $ 32,000 $ 25,000 Accounts receivable 22,000 23,000 Accrued liabilities 8,000 9,000 Inventories 34,000 31,000 Income tax payable 10,000 10,000 Prepaid expenses 1,000 3,000 Total current liabilities 50,000 44,000 Total current assets 76,000 60,000

Long-term note payable 44,000 0 Long-term investments 18,000 10,000 Bonds payable 40,000 53,000 Equipment, net 123,000 101,000

Accum depre - equipment -56,000 -49,000 Shareholders' equity

Patent, net 44,000 10,000 Share capital 42,000 15,000 Accum depre - patent -5,000 -2,000 Retained earnings 24,000 18,000

Total assets $ 200,000 $130,000 Total liabilities and shareholders' equity $ 200,000 $ 130,000

Rainbow LTD. Corporation

Income Statement

for the year ended September 31, 2022

Sales $ 662,000

Cost of goods sold 560,000

Gross margin 102,000

Operating expenses:

Salaries and wages 46,000

Depreciation expense, equipment 7,000

Amortization expense, patent 3000

Rent 2,000 58,000

Income from operations 44,000

Other items:

Loss on sale of equipment -2000

Income before income tax 42,000

Income taxes 16000

Net income $ 26,000

Additional information for Rainbow LTD. Corporation:

• Equipment was purchased for $98,000 during the year.
• Equipment with a carrying amount of $76,000 was sold for proceeds of $74,000.
• Rainbow LTD. bought $8,000 of long-term investments.

1. Using the indirect method, prepare a complete statement of cash flows for the year ended September 31, 2022, for Rainbow LTD. Corporation.