Question
The financial statements for Fallon Sales Limited are shown below: Statement of Financial Position As of 31 December 20X5 20X4 Assets Cash $17,100 $20,000 Accounts
The financial statements for Fallon Sales Limited are shown below:
Statement of Financial Position
As of 31 December 20X5 20X4 Assets Cash $17,100 $20,000 Accounts receivable 72,500 60,000 Merchandise inventory 131,400 180,000 Prepaid insurance 2,600 2,400 Investments 10,000 30,000 Land 70,000 70,000 Capital assets, net 278,000 240,000 Goodwill, net 67,900 106,600 $649,500 $709,000
Liabilities and equity Accounts payable $98,000 $111,000
Rent payable 6,500 2,000 Income tax payable 6,400 8,000 Bonds payable 150,000 260,000 Pension obligation 6,700 5,000 Common shares 324,000 270,000 Retained earnings 57,900 53,000 $649,500 $709,000
Statement of Comprehensive Income
For the year ended 31 December 20X5 Sales revenue $399,100 Investment revenue 1,900 Cost of goods sold 184,400 Depreciation expense 14,000 Goodwill impairment 38,700 Operating expenses 122,000 Interest expense 4,400 Loss on sale of investment 6,000 Income tax expense 14,600 Net earnings and comprehensive income $16,900 During the year, the company purchased a capital asset valued at $28,000; payment was made by issuing common shares. Additional capital assets were acquired for cash. Changes in other accounts were typical transactions.
Required: 1. Prepare the statement of cash flow, using the indirect method. Omit the separate disclosure of cash flow for interest, investment income, and income tax.
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