The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been distributed at a meeting of the company's board of directors. The members of the board of directors were desirous of knowing the reason or reasons why the cash balance different from the net income. 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 directors. The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information. Auga Company Ltd. Comparative Balance Sheet December 31, 2020 and 2021 2021 2020 Increase/(Decrease) Assets Cash 238,000 215,200 ? Accounts Receivable 303,200 259,300 ? Inventories 358,300 348,200 ? Prepaid expenses 35,350 43,100 ? Intangible assets 205,000 205,000 ? Plant assets, net 1,105,000 910,000 ? Total Assets 2,244,850 1,980,800 Liabilities Accounts payable 254,300 240,000 ? Accrued liabilities 415,300 410,000 ? Income tax payable 115,000 135,400 ? Long-term notes payable 845,400 910,500 ? Stockholders' Equity Common Stock 295,500 275,300 ? Retained earnings 345,600 295,400 ? Treasury stock (26,250) (285,800) ? Total liabilities and stockholders' equity 2,244,850 1,980,800 Auga Company Ltd. Income Statement Year Ended December 31,2021 Revenues and gains: Sales revenue 2,224,000 Gain on sale of plant assets 115,500 Total revenues and gains 2,339,500 Expenses Cost of goods sold 1,305,000 Depreciation expense 165,4001 Other operating expense 405,400 Total expenses 1,875,800 Income before income taxes 463,700 Income tax expense 265,000 Net Income 198,700 Notes Acquisition of plant asset during 2021 Sale proceeds from sale of plant asset| Receipt issuance notes payable Payment for note payable Dividend paid Book value of equipment sold 600,9001 356,000 384,900 450,000 148,500 240,500 Requirements 1. Reconstruct the company's comparative balance sheet for 2020/2021 using the information and compute and show the missing figures to include the appropriate sign as a positive or negative figure. 2. Prepare a complete statement of cash flows for 2021 using the indirect method. 3. True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows
