Riverbeds Custom Clothing (RCC) sells branded clothing to resorts and corporations. The companys comparative financial statements are presented below.

Following is additional information concerning RCCs transactions during the year ended December 31, 2020:

1. Equipment costing $35,000 was purchased by paying $25,000 cash and issuing 400 common shares.

2. Equipment costing $75,000 that was purchased at the beginning of 2019 was sold at the end of 2020 for $40,000. Straight-line depreciation had been used with an expected asset life of 5 years and a residual value of $0.

3. The other expenses relate to prepaid items.

4. In order to supplement its cash, RCC increased its bank loan by $11,000.

5. Cash dividends of $26,500 were paid at the end of the fiscal year.

6. Cost of sales includes $181,000 of direct labour costs.

Instructions:

Prepare a statement of cash flows for RCC for the year ended December 31, 2020, using the direct method. RCC follows ASPE. Include any note disclosure on non-cash financing and investing transactions. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

2019 78,000 25,600 47,100 3.200 153,900 RIVERBED'S CUSTOM CLOTHING STATEMENT OF FINANCIAL POSITION December 31 Current Assets 2020 Cash 157,000 Accounts receivable 32,000 Inventory 74,000 Prepaid expenses 10,100 Total current assets 273,100 Property and equipment Property and equipment 101,000 Less: Accumulated depreciation 58,400 Net property and equipment 42,600 TOTAL ASSETS $315,700 Current liabilities Accounts payable 25,200 Salaries payable 8,600 Interest payable 5,100 Total current liabilities 38,900 Loan payable 125,000 Total liabilities 163,900 Shareholders' equity Common shares 20,400 Retained earnings 131,400 Total shareholders' equity 151,800 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $315,700 141,000 57,400 83,600 $237,500 31,100 4,800 8,200 44,100 114,000 158,100 1,400 78,000 79,400 $237,500 2019 744,000 558,000 186,000 RIVERBED'S CUSTOM CLOTHING INCOME STATEMENT For the Years Ended December 31 2020 Sales revenue 883,000 Cost of sales 623,000 Gross margin 260,000 Expenses Salary expense 103,000 Interest expense 4,900 Other expenses 7,900 Depreciation expense 31,000 Total expenses 146,800 Operating income 113,200 Loss on disposal of equipment 5,000 Income tax expense 28,300 Net income 79,900 88,000 2,100 6,200 32,400 128,700 57,300 1,000 17,300 39,000 Riverbed's Custom Clothing Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid for Interest Cash Paid for Taxes Cash Paid to Employees Net Cash Provided by Operating Activities V Cash Flows from Investing Activities Cash Paid for Purchase of Equipment Proceeds from Sale of Equipment Net Cash Provided by Investing Activities Cash Flows from Financing Activities Increase in Bank Loan Payable Payment of Dividends Issuance of Common Shares Net Cash Used by Financing Activities Increase in Cash Opening Cash Balance Closing Cash Balance $ Non-cash investing and financing activities Issuance of Common Shares in Partial Payment for Equipment $