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The statement of income and unclassified statement of financial position for Cullumber, Inc. follow: CULLUMBER, INC. Statement of Financial Position December 31 Assets 2021 2020

The statement of income and unclassified statement of financial position for Cullumber, Inc. follow:

CULLUMBER, INC. Statement of Financial Position December 31

Assets 2021 2020

Cash $99,000 $47,400

Trading investments 126,000 113,000

Accounts receivable 70,000 41,100

Inventory 119,800 91,000

Estimated inventory returns 2,800 2,100

Prepaid expenses 18,300 27,400

Equipment 304,500 276,000

Accumulated depreciation (46,000 ) (53,300 )

Total assets $694,400 $544,700

Liabilities and Shareholders Equity

Accounts payable $98,000 $71,900

Property tax payable 10,400 6,800

Refund liability 1,400 800

Bank loan payablecurrent portion 100,000 128,100

Bank loan payablenoncurrent portion 31,600 31,600

Common shares 210,000 180,000

Retained earnings 243,000 125,500

Total liabilities and shareholders equity $694,400 $544,700

CULLUMBER, INC.

Statement of Income

Year Ended December 31, 2021

Sales $536,550

Cost of goods sold 188,700

Gross profit 347,850

Operating expenses 116,420

Income from operations 231,430

Other income and expenses

Unrealized gain on trading investments $13,000

Interest expense (4,780 ) 8,220

Income before income tax 239,650

Income tax expense 40,000

Net income $199,650

Additional information regarding 2021:

1. Prepaid expenses and property tax payable relate to operating expenses.

2. New equipment costing $87,000 was purchased for $20,800 cash and a $66,200 long-term bank loan payable.

3. Old equipment having an original cost of $58,500 was sold for $1,500.

4. Accounts payable relate to inventory suppliers.

5. Some of the bank loan was repaid during the year.

6. A dividend was paid during the year.

7. Operating expenses include $46,600 of depreciation expense and a $3,100 loss on disposal of equipment.

8. Common shares were issued for $42,000 cash during the year and some common shares were bought back and retired at the cost they were originally issued at.

(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).)

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