Organic Developments Ltd. (ODL) is an importer of organic produce from California. The company has been experiencing significant growth and is preparing to approach the bank for a loan to acquire additional capital assets. As CFO, you are tasked with preparing the statement of cash flows that is required as part of the loan application. You have the statement of financial position and the statement of income to help you prepare the statement of cash flows. In addition you also have the following information:

1. During the year, the company borrowed $14,000 by increasing its bank loan payable.

2. In September, ODL sold equipment for $6,000 cash. The equipment had originally cost $134,000 and had a net carrying amount of $14,000 at the time of sale.

3. In June, ODL acquired land with a value of $120,000 by issuing common shares with an equivalent value. The land is to be used as a site for a warehouse it hopes to construct in the next year.

Required

a. Using the information above, prepare the statement of cash flows for Organic Developments Ltd. for the year ended October 31, 2020, using the indirect method.

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

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ORGANIC DEVELOPMENTS LTD. Statement of Financial Position As at October 31 2020 2019 Assets Current assets: $ 48,000 $ 36,000 Cash 68,000 Accounts receivable 58,000 Inventory 180,000 160,000 Total current assets 286,000 264,000 Equipment 620,000 540,000 Accumulated depreciation, equipment (300,000) (360,000) Land 120,000 $ 726,000 $ 444,000 ORGANIC DEVELOPMENTS LTD. Statement of Financial Position As at October 31 Liabilities and shareholders' equity Current liabilities Accounts payable $ 82,000 $ 40,000 Dividends payable 30,000 36,000 Total current liabilities 112,000 76,000 Bank loan payable 74,000 120,000 Common shares 300,000 180,000 Retained earnings 240,000 68,000 $ 726,000 $ 444,000 ORGANIC DEVELOPMENTS LTD. Statement of Income For the year ended October 31, 2020 Sales revenue $1,040,000 Cost of goods sold 520,000 Gross margin 520,000 Expenses Advertising expense $ 30,000 Wage ex pense 144,000 Utilities expense 12,000 Depreciation expense 60,000 Rent expense 26,000 272,000 Loss on sale of equipment 8,000 Net income $ 240,000