The comparative, unclassified statement of financial position for Pharoah Ltd. shows the following balances at December 31: Pharoah Ltd. Statement of Financial Position December 31 Assets 2021 2020 Cash $64,000 $0 Accounts receivable 17,000 33,000 Inventory 35,000 59,000 Land 97,000 109,000 Buildings 517,000 258,000 Accumulated depreciation-buildings (74,000 ) (99,000 ) Equipment 85,000 45,000 Accumulated depreciation-equipment (23,000 ) (12,000 ) Total assets $718,000 $393,000 Liabilities and S. lauitu Total assets Liabilities and Shareholders' Equity $718,000 $393,000 Bank overdraft $0 $8,000 Accounts payable $ 47,000 $ 25,000 Income tax payable 3,000 2,000 Interest payable 5,000 6,000 Dividends payable 3,000 1,000 Bank loan payable-current portion 25,000 25,000 Bank loan payable-non-current portion 384,000 204,000 Common shares 203,000 92,000 Retained earnings 48,000 30,000 Total liabilities and shareholders' equity $718,000 $393,000 Additional information regarding 2021: Additional information regarding 2021: 1. Net income was $55,000. 2. A gain of $8,000 was recorded on the disposal of a small parcel of land. No land was purchased during the year. 3. A gain on the disposal of $39,000 was recorded when an old building was sold for $55,000 cash. A new building was purchased for $360,000 and depreciation expense on buildings for the year was $60,000. 4. Equipment costing $64,000 was purchased while a loss of $8,000 was recorded on equipment that was sold for $5,000. The equipment that was sold late in the year had accumulated depreciation of $11,000. 5. The company took out $212,000 of new bank loans during the year. 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 it parenthesis e.g. (15,000).) PHAROAH LTD. (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 e.g. (15,000).) PHAROAH LTD. Statement of Cash Flows-Indirect Method Cash flows from operating activities Net income Year Ended December 31, 2021 Adjustments to reconcile net income to Net cash provided by operating activities Decrease in accounts receivable Decrease in inventory 16000 24000 55000 Decrease in inventory Decrease in interest payable 24000 -1000 Increase in income tax payable 1000 Increase in accounts payable Gain on disposal of land 22000 -8000 Gain on disposal of building -39000 Loss on disposal of equipment +8000 Depreciation expense -71000 Cash flows from operating activities Cash flows from operating activities Net cash used by financing activities Purchase of building Purchase of equipment Proceeds from disposal of land -360000 -64000 12000 Proceeds from disposal of equipment 5000 Proceeds from disposal of building 55000 Cash flows from financing activities Net cash used vities Proceeds from disposal of building Cash flows from financing activities Net cash used by investing activities Repayments of bank loan Dividends paid Issue of common shares Additions to bank loan Cash flows from investing activities Net increase in cash 55000 50000 3000 111000 212000 Dividends paid Issue of common shares Additions to bank loan Cash flows from investing activities Net increase in cash Bank overdraft, January 1 Cash, December 31 3000 111000 212000 eTextbook and Media Save for Later Attempts: 2 of 3 used Submit