The income statement and additional data of Ahn Photography Ltd. follow:

Additional data:

a. Collections from clients are $3,500 more than revenues.

b. Increase in cash balance, $5,000.

c. Payments to employees are $2,000 less than salaries expense.

d. Interest expense and income tax expense equal their cash amounts.

e. Acquisition of property, plant, and equipment is $58,000. Of this amount, $50,500 is paid in cash, $7,500 by signing a long-term note payable.

f. Cash received from sale of land, $5,000.

g. Cash received from issuance of common shares, $21,000. 

h. Payment of long-term note payable, $10,000.

i. Payment of cash dividends, $7,500.

j. Payments for rent and insurance are equal to expense.

k. Payment for office supplies is $3,000 more than expense.

l. Opening cash balance, $8,000.

Required

1. Prepare Ahn Photography Ltd.’s cash flow statement by the direct method for operating activities and a note to the financial statements providing a summary of non-cash investing and financing activities.

2. Assume Ahn Photography Ltd. has adopted IFRS. What would be the difference in the cash flow statement using this framework?

Transcribed Image Text:

AHN PHOTOGRAPHY LTD. Income Statement For the Year Ended December 31, 2020 Revenues Consulting revenue $137,000 Expenses Salaries expense $74,000 Amortization expense 14,500 Rent expense 6,000 Office supplies expense 1,500 Insurance expense 1,000 Interest expense 1,000 Income tax expense 9,000 107,000 Net income $ 30,000