Tangent Controls Ltd. is a manufacturer of crash-protected event recorders that are used in railway systems around the world to record event data. These data can be retrieved and analyzed to monitor and improve operations, but also to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has customers across the world, but its largest market is North America. The company has been hurt by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that the latest industry developments, which call for a significant increase in the shipment of oil by railcar, will mean an increase in sales. In the meantime, the company has been seeking new investors and has approached a leading Canadian venture capital firm to see if it might be interested in investing. As part of its approach, Tangent has provided the following financial information for the most recent fiscal year. TANGENT CONTROLS LTD. Statement of Financial Position As at September 30 2020 2019 Assets Current assets: Cash $ 0 $89.280 Accounts receivable (net) 745,240 468,720 Inventory 942,400 736,560 Total current assets 1,687,640 1.294,560 Equipment 1,993,920 2,365,920 Accumulated depreciation, equipment (1,767,000) (1,785,600) Total assets $1,914,560 $1,874,880 Liabilities and shareholders' equity Current liabilities: Bank indebtedness $27.280 $ 0 Accounts payable 312.480 Total current liabilities 349,680 312.480 Bank loan payable 188,480 178,560 Common shares 1,116,000 1,116,000 Retained earnings 260,400 267,840 Total liabilities and shareholders' equity $1.914,560 $1,874,880 322,400 TANGENT CONTROLS LTD. Statement of Income For the year ended September 30, 2020 Sales revenue $7,526,800 Cost of goods sold 4,805,000 Gross profit 2.721,800 Wages expense 1,959,200 Utilities expense 359.600 Depreciation expense 279.000 Rent expense 97,960 Interest expense 58,280 Loss from operations (32,240) Gain on sale of equipment 49,600 Earnings before income tax 17,360 Income tax expense 3,720 Net income $13,640 Additional information: 1. 2. During the year, the company repaid principal of $37,200 on its loan payable. During the year, equipment with a net carrying amount of $74,400 was sold. No equipment was purchased during the year. 3. (1) You work for the venture capital firm and have been tasked with preparing the statement of cash flows for Tangent using the indirect method for determining cash flows from operating activities. (Show amounts that decrease cash flow with either a-sign eg. -15,000 or in parenthesis eg. (15,000).) TANGENT CONTROLS LTD. Statement of Cash Flows, Indirect Method For the Year Ended December 31, 2020 Question 5 of 6