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 $66,240 552,920 699,200 Accounts receivable (net) Inventory Total current assets Equipment Accumulated depreciation, equipment Total assets Liabilities and shareholders' equity Current liabilities: 1,252,120 1,479,360 (1,311,000) 347,760 546,480 960,480 1,755,360 (1,324,800) $1,391,040 $1,420,480 Bank indebtedness $20,240 $ 0 239,200 231,840 231,840 Accounts payable Total current liabilities Bank loan payable Common shares Retained earnings Total liabilities and shareholders' equity 259,440 139,840 828,000 193,200 $1,420,480 132,480 828.000 198,720 $1,391,040 TANGENT CONTROLS LTD. Statement of Income For the year ended September 30, 2020 Sales revenue $5,584,400 Cost of goods sold 3,565,000 Gross profit 2,019,400 Wages expense 1,453,600 Utilities expense 266,800 Depreciation expense 207,000 Rent expense 72,680 Interest expense 43,240 Loss from operations (23,920) Gain on sale of equipment 36,800 Earnings before income tax 12,880 Income tax expense 2,760 Net income $10,120 Additional information: During the year, the company repaid principal of $27,600 on its loan payable. During the year, equipment with a net carrying amount of $55,200 was sold. 3. No equipment was purchased during the year. 1. 2. (a1) 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 - signeg. -15,000 or in parenthesis eg. (15,000).) TANGENT CONTROLS LTD. Statement of Cash Flows, Indirect Method For the Year Ended December 31, 2020 $ $ II $ $ Supplemental Cash Flow information: Cash paid for interest Cash paid for income tax $ $
