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

Requirements

1. In comparison to investing and financing activities, it is often said that cash from operating activities must be the main source of cash to achieve long term success of the company. Do you agree or disagree with this statement? In your own words, give reason or reasons to support your answer taking into consideration the possible consequences of the cash being provided by any of the other two activities over the long run.

2. Prepare a complete statement of cash flows for October 2021 using the indirect method based on the information and guidance provided above.