The following selected account balances are taken from the financial statements of Mandrich Inc. at its calendar year end prepared using IFRS: 

At December 31, 2020, the following information is available: 

1. Mandrich Inc. repurchased 2,000 common shares during 2020. The repurchased shares had a weighted average cost of $32,000. 

2. During 2020, 1,000 common shares were issued as a stock dividend. 

3. Mandrich Inc. chooses to classify dividends paid as financing activities. 

Instructions 

a. Calculate net income for the fiscal year ended December 31, 2020. 

b. Provide the necessary disclosure for all of Mandrich Inc.'s transactions on the statement of cash flows. Also state the section of the statement of cash flows in which each item is reported. Where there are choices or options in the classification, provide details of the options available. 

c. Does Mandrich Inc. have other choices in classifying dividends paid on the statement of cash flows? 

d. Assume now that the preferred shares are term preferred shares classified as debt. Repeat part (a).

Transcribed Image Text:

2020 2019 Preferred shares classified as equity $145,000 $145,000 Common shares: 9,000 shares in 2020, 10,000 shares in 2019 142,000 160,000 Contributed surplus-reacquisition of common shares Cash dividends-preferred 3,500 -0- 6,250 6,250 Stock dividends-common 14,000 -0- Retained earnings (balance after closing entries) 300,000 240,000