Digiread Technologies Ltd. (DTL) is a privately held distributor of e-readers and tablets. The Calgary-based company is well established and is currently managed by its founder, Erin Jacobs. The company€™s financial statements are presented below, together with some additional information.

Required:
DTL€™s management shareholders have asked you to prepare the statement of cash flows for DTL using either the direct or indirect method for determining cash flows from operating activities. Prepare the statement for them.

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DIGIREAD TECHNOLOGIES LTD Statement of Income As at December 31, 2016 Sales Cost of goods sold Gross profit $ 50,500,000 34,400,000 16,100,000 4,000,000 1,200,000 1,900,000 1,600,000 7,400,000 600,000 $8,000,000 Wage expense Depreciation expense Interest expense Income tax expense Net income from operations Gain on sale of equipment Net income DIGIREAD TECHNOLOGIES LTD Statement of Financial Position As at December 31 2016 2015 Assets Current assets S 8,500,000 15,500,000 19,000,000 43,000,000 30,000,000 (6,400,000) $66,600,000 Cash Accounts receivable (net) Inventory Total current assets Equipment Accumulated depreciation, equipment Total Assets Liabilities and Shareholders' Equity Current liabilities $15,500,000 11,500,000 16,900,000 43,900,000 39,400,000 (6,600,000) $76,700,000 Accounts payable Wages payable Total current liabilities Bonds payable Common shares Retained earnings Total Liabilities and Shareholders' Equity $11,900,000 1,200,000 13,100,000 21,000,000 14,000,000 28,600,000 $76,700,000 S 7,000,000 1,000.000 8,000,000 26,000,000 9,000,000 23,600,000 $66,600.000 DIGIREAD TECHNOLOGIES LTD. Other Selected Financial Information for the Year Ended December 31, 2016 1. Total sales in 2016 were consistent with the prior year's and the company's dividend policy has 2. During 2016, DTL sold a piece of equipment for $2.1 million. The equipment had originally cost 3. On August 1, 2016, DTL's board of directors approved the retirement of bonds with a face value of remained consistent for the past five years. $2.5 million and had a net carrying amount of $1.5 lon at the time of sale. $5 mlion through the issuance of common shares.