The income statement for Gum San Ltd., a publicly traded company following IFRS, is presented here: GUM

Question:

The income statement for Gum San Ltd., a publicly traded company following IFRS, is presented here:

GUM SAN LTD.

Income Statement

Year Ended December 31, 2015

Sales ............................................................................ $4,500,000

Cost of goods sold ..............................................................2,390,000

Gross profit .......................................................................2,110,000

Operating expenses .............................................................1,070,000

Profit from operations ..........................................................1,040,000

Interest ...............................................................................12,000

Profit before income tax ........................................................1,028,000

Income tax expense ................................................................260,000

Profit............................................................................... $ 768,000

Additional information:

1. Operating expenses include $150,000 of depreciation expense and a $12,000 gain on disposal of equipment.

2. Accounts receivable increased by $500,000.

3. Merchandise inventory decreased by $220,000.

4. Prepaid expenses related to operating expenses increased by $170,000.

5. Accounts payable to suppliers of merchandise increased by $50,000.

6. Accrued liabilities related to operating expenses decreased by $165,000.

7. Interest payable increased by $5,000.

8. Unearned revenue that is received from customers increased by $8,000.

9. Income tax payable decreased by $16,000.

Instructions

(a) Prepare the operating activities section of the statement of cash flows, using either

(1) The indirect method

(2) The direct method, as assigned by your instructor.

(b) Would your answer in part (a) change if Gum San were a private company following ASPE?

Accounts Payable
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Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...