Refer to the information presented Wetaskiwin Ltd. in P17–9A.

Additional information:

1. Accounts receivable are from the sale of merchandise on credit.

2. Accounts payable relate to the purchase of merchandise on credit.

Instructions

Prepare a cash flow statement for the year using the direct method.

TAKING IT FURTHER Wetaskiwin Ltd. had a positive cash balance at the beginning and end of 2014. Given that, is it possible that the company could have had a negative cash balance at one or more points during the year? Explain.

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WETASKIWIN LTD. Balance Sheet December 31 Assets 2014 2013 10,000 23,000 14,000 25,000 78,000 (24,000) 126,000 $ 9,000 Short-term notes receivable Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation 14,000 28,000 29,000 73,000 (30,000) $123,000 Total assets Liabilities and Shareholders' Equit Accounts payable Income tax payable Notes payable Common shares Retained earnings 25,000 3,000 15,000 25,000 55,000 $123,000 S 43,000 20,000 10,000 25,000 28,000 $126,000 Total liabilities and shareholders equity WETASKIWIN LTD. Income Statement Year Ended December 31, 2014 Sales Cost of goods sold Gross profit Operating expenses Loss on sale of equipment Profit from operations Other revenues and expenses $286,000 194,000 92,000 $38,000 2,000 40,000 52,000 $(1,000) 2,000 Interest revenue Interest expense Profit before income tax Income tax expense Profit 1,000 51,000 15,000 $36,000