Cineplex Inc. is currently Canada€™s largest film exhibition organization, with theatres in six provinces. Excerpts from its 2013 financial statements are in Exhibits 2-20A to E.

Required:
a. Determine the amount of dividends declared during fiscal 2013. Where did you find this information?
b. How does the declaration of dividends affect the accounting equation?
c. Determine the amount of dividends paid during fiscal 2013. Where did you find this information?
d. How does the payment of dividends affect the accounting equation?
e. Given Cineplex Inc.€™s cost of goods sold of $74,693 in 2013 and $68,398 in 2012, determine the gross margin on concession sales for the two years. Explain the results of your gross margin calculations.
f. What was Cineplex€™s cash flow pattern in 2013? Did it ft the €œnormal€ pattern discussed in the chapter?
g. Refer to Cineplex Inc.€™s €œOther Costs€ note 23. What are the largest two expenses? Why would these costs be expected in this line of business?

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CINEPLEX INC.'S 2013 CONSOLIDATED BALANCE SHEETS Consolidated Balance Sheets (expressed in thousands of Canadian dollars) December 31 December 31 2013 2012 (note 2) Assets Current assets Cash and cash equivalents (note 6) Trade and other receivables (note 7) Inventories (note 8) Prepaid expenses and other current assets $44,140 100,891 7,234 6,838 159,103 $ 48,665 77,278 5,193 3,047 134,183 Non-current assets Property, equipment and leaseholds (note 9) Deferred income taxes (note 10) Fair value of interest rate swap agreements (note 4) Interests in joint ventures inote 11) Intangible assets (note 12) Goodwill (note 13) 459,112 17,635 92 44,359 113,601 797,476 $1,591,378 418,498 53,528 41,623 78,460 608,929 $1,335,221 Liabilities Current liabilities Accounts payable and accrued expenses (note 14) Share-based compensation (note 15) Dividends payable (note 16) Income taxes payable (note 10) Deferred revenue Finance lease obligations (note 18) Fair value of interest rate swap agreements (note 4) Convertible debentures (note 21) 157,333 12,151 7,552 2,656 136,373 2,394 635 $129,499 7,063 13,654 106,253 2,222 513 319,094 259,204 Non-current liabilities Share-based compensation (note 15) Long-term debt (note 17) Fair value of interest rate swap agreements (note 4) Finance lease obligations (note 18) Post-employment benefit obligations (note 19) Other liabilities (note 20) Convertible debentures (note 21) 15,622 217,151 12,223 148,066 273 20,548 6,274 141,319 17,722 6,522 170,125 96,870 524,012 328,703 843,106 587,907 Total liabilities Equity Share capital (note 22) Deficit Accumulated other comprehensive loss Contributed surplus 847,235 (102,547) (1,142) 3,768 747,314 $1,335,221 853,411 (107,323) (1,715) 3,899 748,272 $1,591,378 CINEPLEX INC.'S 2013 CONSOLIDATED STATEMENTS OF CASH FLOWS Consolidated Statements of Cash Flows For the years ended December 31, 2013 and 2012 (expressed in thousands of Canadian dollars) 2013 2012 (note 2) Cash provided by (used in) Operating activities Net income Adjustments to reconcile net income to net cash provided by operating 串83,557 $120,484 activities Depreciation and amortization of property, equipment and leaseholds, and intangible assets Amortization of tenant inducements, rent averaging liabilities and fair value lease contract liabilities Accretion of debt issuance costs and other non-cash interest Loss (gain) on disposal of assets (Gain) on acquisition of business Deferred income taxes Interest rate swap agreements non-cash interest Non-cash share-based compensation Accretion of convertible debentures Net change in interests in joint ventures 70,890 62,163 (5,033) 562 (2,352) (24,752) 1,189 1,485 2,108 323 4,356 7,615 7,486 2,001 4,372 29,369 (939) 1,826 274 2,686) 5,417 37.302 224,648 Tenant inducements Changes in operating assets and liabilities (note 26) Net cash provided by operating activities Investing activities Proceeds from sale of assets Purchases of property, equipment and leaseholds Acquisition of business, net of cash acquired (note 3) Net cash invested in CDCP Net cash used in investing activities Financing activities Dividends paid Borrowings (repayments) under credit facility, net Repayment of debt acquired with business (note 3) Payments under finance lease:s Proceeds from issuance of shares 175,634 3,573 (62,410) (238,338) 3,683 72,242) (2,811) 438) 71,808) (297,225) (88,130) 70,000 (12,875) (2,277) (80,794) (20,000) (2,104) 501 Net proceeds from issuance of convertible debentures (note 21) Deferred financing fees (notes 17 and 21) Shares re Repayment of convertible debentures at maturity Net cash provided by (used in) financing activities Decrease in cash and cash equivalents Cash and cash equivalents Beginning of year Cash and cash equivalents End of year Supplemental information Cash paid for interest Cash paid for income taxes 103,469 2,135) purchased and cancelled 68,052 (4,525) 48,665 44,140 (1,786) (1,123) (105,306) (1,480) 50,145 $48,665 $9,421 14,148 $10,293 $35,268 CINEPLEX INC.'S 2013 CONSOLIDATED STATEMENTS OF OPERATIONS Consolidated Statements of Operations For the years ended December 31, 2013 and 2012 (expressed in thousands of Canadian dollars, except per share amounts) 2013 2012 (note 2) Revenues Box office Concessions Other S 665,306 350,353 155,608 1,171,267 $ 638,296 329,332 124,873 1,092,501 Expenses Film cost Cost of concessions Depreciation and amortization Loss (gain) on disposal of assets Gain) on acquisition of business (note 3 d) Other costs (note 23) Share of income of joint ventures Interest expense Interest income 331,281 68,398 62,163 (2,352) (24,752) 495,537 (3,263) 12,585 346,373 74,693 70,890 4,372 551,819 (3,850) 10,743 1,054,733 116,534 939,392 153,109 Income before income taxes Provision for income taxes Current (note 10) Deferred (note 10) 3,608 29,369 32,977 S 83,557 31,436 1,189 32,625 120,484 Net income CINEPLEX INC. 'S 2013 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Consolidated statements of changes in equity For the years ended December 31, 2013 and 2012 (expressed in thousands of Canadian dollars) Accumulated Other Share Contributecd Capital (note 22) (note 15) Surplus Loss Deficit Total $ 847,235 3,768 S (1,142) Balance January 1, 2013 Net income Other comprehensive income (page 4)(573) Total comprehensive income Dividends declared (note 16) Long-term incentive plan obligation Issuance of convertible debentures Share option expense Issuance of shares on exercise (102,547) 747,314 83,557 287) 83,270 (88,619 (88,619) 248 4,471 1,588 83,557 26 83,843 (573) 248 4,471 1,588 145 $ 3,899 of options 1,457 Balance December 31, 2013 S 853,411 1,715) (107,323) S748,272 Accumulated Other Share Contributed Comprehensive Capital (note 22) (note 15) Surplus Loss Deficit Total 764,801 $(2,723) Balance January 1, 2012 Share option liabilities reclassified Net income Other comprehensive income (page 4) Total comprehensive income Dividends declared (note 16) Long-term incentive plan obligation Long-term incentive plan shares Share option expense Issuance of shares on exercise S (140,469) 621,609 6,850 120,484 1,441 120,344 121,925 (81,572 (81,572) 4,818) 6,471 2,071 6,850 120,484 1,581 1,581 (4,818) 6,471 2,071 5,873 (5,372) 219 of options Issuance of shares on conversion 501 of debentures Shares repurchased and cancelled 75,844 (936) 76,063 (850) (1,786 Balance December 31, 2012 847,235 $3,768 $(1,142) $ (102,547) $747,314 EXCERPT FROM CINEPLEX INC.'S 2013 ANNUAL REPORT 23. Other costs 2013 2012 (note 2) $191,286 127,745 61,448 25,423 41,191 11,969 19,157 13,026 12,937 2,380 24,256 4,088 4,204 403 2,569 9,737 $551,819 $169,304 117,840 56,212 22,941 35,225 11,005 17,620 10,739 9,237 2,112 23,374 5,191 3,801 513 2,058 8,365 $495,537 Employee salaries and benefits Realty and occupancy taxes and Utilities Purchased services Other inventories consumed Repairs and maintenance Office and operating supplies Licences and franchise fees Insurance Advertising and promotion Professional and consulting fees Telecommunications and data Bad debts Equipment rental Other costs