The following is additional information concerning Spoke$$s transactions during the year ended

May $31,2021$:

$$ All sales during the year were made on account.

$$ All merchandise was purchased on account, making up the total accounts payable

account.

$$ Capital assets costing $$90,000$ were purchased by paying $$40,000$ in cash and by issuing

$5,000$ shares of stock.

$$ The $$Other expenses$$ are related to prepaid items.

$$ All income taxes incurred during the year were paid during the year.

$$ In order to supplement its cash, Spoke issued $4,000$ common shares at $$10$ per share.

$$ There were no penalties assessed for the retirement of bonds.

$$ Cash dividends of $$115,000$ were declared and paid at the end of the fiscal year.

Required: Prepare a statement of cash flows for Spoke Inc. for the year ended May $31,$

$2021$ using the indirect method. Spoke follows IFRS and has adopted the policy of

classifying interest paid as operating and dividends paid as financing activities.

$1.$Prepare the operating activities section of the statement of cash flows $(7$ marks$)$

Net earnings$($loss$)$ $$140,000$

Cash provided$($used$)$ by operating activities

$9$

Question #$5($continued$)$

$2.$ Prepare the investing activities section of the statement of cash flows. $(2$ marks$)$

Cash used $($provided$)$ for investing activities

$3.$ Prepare the financing activities section of the statement of cash flows. $(4$ marks$)$

Cash used $($provided$)$ for financing activities

$4.$ Reconcile the change in cash and cash equivalents during $2020(2$ marks$)$

$5.$ Include note disclosure of the non$-$cash transactions, if any. $(1$ mark$)$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$10$

Question #$5($cont$$d$)$

$6.$ Using the direct method, prepare below the cash flow from operating activities

section only for Spoke Company for the year ended May $31,2021.(7$ marks$)$

Operating activities section of the statement of cash flows$-$Direct Method

$7.$ Assume that you are a shareholder of Spoke. Compute the free cash flow and

the dividend payout ratio that are highlighted in the statement of cash flows for the

year ended May $31,2021.(2$ marks$)$

Free Cash Flow:$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Dividend Payout Ratio: $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$