The comparative balance sheet and income statement of Sign Language Hearing Co Ltd, have just been prepared and presented to the owners by the companys Accountant. The owners are concerned about the movement in the companys cash and cash equivalent given that the balance sheet does not show or explain the reason 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 each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your surname initial. (Hint!!!! Example surname Brad will use the initial B and that person should only use the info presented in line with the heading with their surname initial. If you have a double barrel surname for example Campbell-Brown, use the initial for the one at the front which in this case would be C.

Financial info to be used by surnames with initials (S, W, G, Z)

Sign Language Hearing Co Ltd
Comparative Balance Sheet
October 31, 2020, and 2021
	2021	2020
Assets
Cash and cash equivalent	275,000	320,000
Accounts Receivable	240,000	180,000
Inventory	220,000	240,000
Prepaid expenses	45,000	45,000
Equipment, net	510,000	350,000
Total Assets	1,290,000	1,135,000
Liabilities
Accounts payable	285,000	305,000
Accrued liabilities	305,000	285,000
Bond payable	205,000	145,000
Stockholders' Equity:
Common Stock	120,000	85,500
Retained earnings	475,000	314,500
Treasury stock	(100,000)	-
Total liabilities and stockholders' equity	1,290,000	1,135,000

Sign Language Hearing Co Ltd
Income Statement
Year Ended October 31,2021
Revenues and gains:
Sales revenue	950,000
Gain on sale of equipment	10,000
Total revenues and gains		960,000
Expenses
Cost of goods sold	450,000
Salary expense	105,000
Depreciation expense	26,000
Rent expense	155,500
Total expenses		736,500
Income before income taxes		223,500
Income tax expense		38,900
Net Profit		184,600
Notes
Purchase of equipment		286,000
Cash receipt from sale of equipment		110,000
Issuance of bonds payable to borrow cash		60,000
Cash receipt from issuance of common stock		34,500
Dividend paid		24,100
Book value of equipment sold		100,000
Purchase of treasury stock		100,000

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.