The comparative, unclassified statement of financial position for Aqua Ltd. shows the following balances at December 31: Aqua Ltd. Statement of Financial Position December 31 Assets 2021 2020 Cash $ 27,000 $0 Accounts receivable 26,000 38,000 Inventory 24,000 50,000 Land 99,000 105,000 Buildings 526,000 264,000 Accumulated depreciation-buildings (65,000) (98,000) Equipment 82,000 44,000 Accumulated depreciation-equipment (17,000) (15,000) Total assets $702,000 $388,000 Liabilities and Shareholders' Equity Bank overdraft $0 $8,000 Accounts payable $ 44,000 $ 23,000 Income tax payable 3,000 2,000 Interest payable 4,000 5,000 Dividends payable 3,000 1,000 Bank loan payable-current portion 22,000 22,000 Bank loan payable-non-current portion 377,000 206,000 Common shares 195,000 87,000 Retained earnings 54,000 34,000 Total liabilities and shareholders' equity $702,000 $388,000 Additional information regarding 2021: 1. 2. 3. Net income was $57,000. A gain of $9,000 was recorded on the disposal of a small parcel of land. No land was purchased during the year. A gain on the disposal of $42,000 was recorded when an old building was sold for $58,000 cash. A new building was purchased for $366,000 and depreciation expense on buildings for the year was $55,000. Equipment costing $63,000 was purchased while a loss of $6,000 was recorded on equipment that was sold for $5,000. The equipment that was sold late in the year had accumulated depreciation of $14,000. The company took out $208,000 of new bank loans during the year. 4. 5. 6. Dividends were declared and paid and no common shares were bought back by the company. (a) Prepare the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis eg. (15,000).) AQUA LTD. Statement of Cash Flows-Indirect Method Year Ended December 31, 2021 Cash flows from operating activities Net income $ 57,000 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense > $ 87000 Gain on disposal of building > > > Purchase of building Net income Decrease in inventory Loss on disposal of building Decrease in accounts receivable Proceeds from disposal of building Proceeds from disposal of land Increase in income tax payable Gain on disposal of building Purchase of land Gain on disposal of equipment Decrease in income tax payable Repayments of bank loan Depreciation expense Decrease in accounts payable Issue of common shares Dividends paid Additions to bank loan Loss on disposal of equipment Decrease in interest payable Gain on disposal of land Proceeds from disposal of equipment Loss on disposal of land Increase in inventory Increase in accounts receivable Increase in interest payable Increase in accounts payable Purchase of equipment Bank overdraft, January 1 Cash, December 31 Cash flows from financing activities Cash flows from investing activities Cash flows from operating activities Net cash provided by financing activities Net cash provided by investing activities Net cash provided by operating activities Net cash used by financing activities Net cash used by investing activities Net cash used by operating activities Net decrease in cash Net increase in cash