Canbuild Materials Ltd. is a family-run do-it-yourself building materials company located on Pelee Island, Ontario. The company produces high-quality building materials for the do-it-yourselfers. The company’s bookkeeper has gone on holiday and the company has brought you in to help it prepare its monthly financial statement package, which the bank requires as part of the terms of the loan financing. You have correctly completed the statement of financial position and the statement of income statement. You only have the statement of cash flows left to prepare based on the following information:

Additional information:

During fiscal year 2020, Canbuild sold a piece of its equipment. The equipment sold had originally cost $153,000 and was sold for $25,000.

Required 

a. Using the information above, prepare Canbuild’s statement of cash flows for the year ended December 31, 2020, using the indirect method.

b. Determine the cash flows from operating activities using the direct method.

Transcribed Image Text:

CANBUILD MATERIALS LTD. Comparative Statement of Financial Position Dec. 31, 2020 Dec. 31, 2019 Assets $ 20,000 $ 50,000 Cash 120,000 Accounts receivable (net) 189,000 Inventory 167,000 187,000 Total current assets 376,000 357,000 Equipment 180,000 195,000 Accumulated depreciation (140,000) (170,000) $382,000 Total assets $416,000 Liabilities and shareholders' equity Current liabilities: $ 70,000 $ 68,000 Accounts payable Dividends payable 29,000 24,000 Total current liabilities 99,000 92,000 Long-term loan payable 107,000 107,000 199,000 Total liabilities 206,000 Common shares 110,000 110,000 Retained earnings 100,000 73,000 Total liabilities and shareholders' equity $416,000 $382,000 CANBUILD MATERIALS LTD. Statement of Income For the year ended December 31, 2020 Sales revenue $1,245,000 Cost of goods sold 655,000 Gross profit 590,000 Expenses Wages expense $221,000 Administrative expenses 46,000 Depreciation expense 98,000 Advertising expense 45,000 Interest ex pense 12,000 Total expenses 422,000 $ 168,000 Net income