Required: (1) Prepare a cash flow statement in good form based on the following information, and

(2) Comment using point form and very briefly on the results. Be brief, what do you think about the cash situation and changes to cash?

(3) Answer very briefly the following question:

Why would a gain on sale of equipment be a cash deduction, NOT an addition, to the adjustments to cash in the operating section of the cash flow statement?

Beg of year End of year

Assets:

Cash $120 $30

Accounts receivable 60 450

Inventory 90 70

Equipment 480 1,200

Less: Acc depn equip (80) (100)

Total assets: $670 $1,650

Liabilities and Equity:

Accounts payable $60 $61

Other current liabilities 70 39

Long-term loan payable 150 900

Common shares 190 150

Retained earnings 200 500

Total liab and o/equity $670 $1,650

Other information:

1. Net income in the year: $405
2. Dividends issued in the year: $105
3. Depreciation expense: $20
4. No equipment was sold or disposed of in the period.
5. The changes in balance sheet accounts offer other relevant information.

Record your answer to Question directly below