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.

1. Total sales in 2020 were consistent with the prior year’s, and the company’s dividend policy has remained consistent for the past five years.

2. During 2020, DTL sold a piece of equipment for $2.1 million. The equipment had originally cost $2.5 million and had a net carrying amount of $1.5 million at the time of sale.

3. On August 1, 2020, DTL’s board of directors approved the retirement of bonds with a carrying amount of $5 million through the issuance of common shares.

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, 2020 Sales revenue $50,500,000 Cost of goods sold 34,400,000 Gross profit 16,100,000 4,000,000 Wages expense Depreciation expense 1,200,000 Interest expense 1,900,000 Income tax expense 1,600,000 Gain on sale of equipment (600,000) $ 8,000,000 Net income DIGIREAD TECHNOLOGIES LTD. Statement of Financial Position As at December 31 2020 2019 Assets Current assets: $ 8,500,000 Cash $15,500,000 Accounts receivable (net) 11,500,000 15,500,000 Inventory 16,900,000 19,000,000 Total current assets 43,900,000 43,000,000 Equipment 39,400,000 30,000,000 (6,400,000) $66,600,000 Accumulated depreciation, equipment (6,600,000) Total assets $76,700,000 Liabilities and shareholders' equity Current liabilities: $ 7,000,000 Accounts payable $11,900,000 1,000,000 Wages payable 1,200,000 Total current liabilities 13,100,000 8,000,000 Bonds payable 21,000,000 26,000,000 Common shares 14,000,000 9,000,000 Retained earnings 28,600,000 23,600,000 Total liabilities and sharcholders' equity $76,700,000 $66,600,000 DIGIREAD TECHNOLOGIES LTD. Other Selected Financial Information for the Year Ended December 31, 2020