Scenario:

The comparative balance sheet and income statement of Sign Language Hearing Co Ltd, have just been prepared and presented to the owners by the company's accountant. The owners are concerned about the movement in the company's cash and cash equivalent given that the balance sheet does not show or explain the reasons or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners. The owners have asked you to assist with the needed clarification and have out forward the following financial information.

Financial info to be used:

Sign Language Hearing Co Ltd
Comparative Balance Sheet
October 31, 2020, and 2021
	2021	2020
Assets
Cash and cash equivalent	188,000	200,000
Accounts Receivable	230,000	200,000
Inventory	350,000	380,000
Equipment, net	350,000	220,000
Total Assets	1,118,000	1,000,000
Liabilities
Accounts payable	260,000	275,000
Accrued liabilities	95,000	75,000
Income tax payable	65,400	65,400
Bond payable	195,200	105,600
Stockholders' Equity:
Common Stock	155,500	95,300
Retained earnings	650,450	550,300
Treasury stock	(303,550)	(166,600)
Total liabilities and stockholders' equity	1,118,000	1,000,000

Sign Language Hearing Co Ltd

Income Statement

Year Ended October 31,2021

Revenues and gains:

Sales revenue

800,000

Gain on sale of equipment

5,000

Total revenues and gains

805,000

Expenses

Cost of goods sold

480,000

Salary expense

58,500

Depreciation expense

20,000

Rent expense

65,000

Total expenses

623,500

Income before income taxes

181,500

Income tax expense

18,000

Net Profit

163,500

Notes

Purchase of equipment		215,000
Cash receipt from sale of equipment		70,000
Issuance of bonds payable to borrow cash		89,600
Cash receipt from issuance of common stock		60,200
Dividend paid		63,350
Book value of equipment sold		65,000
Purchase of treasury stock		136,950