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, 2023, the following information is available:

1. Mandrich repurchased 2,000 common shares during 2023. The repurchased shares had a weighted average cost of $32,000.

2. During 2023, 1,000 common shares were issued as a stock dividend.

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

Instructions

a. Calculate net income for the fiscal year ended December 31, 2023.

b. Provide the necessary disclosure for all of Mandrich’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 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).

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Preferred shares classified as equity Common shares: 9,000 shares in 2023, 10,000 shares in 2022 Contributed surplus-reacquisition of common shares Cash dividends-preferred Stock dividends-common Retained earnings (balance after closing entries) 2023 $145,000 142,000 3,500 6,250 14,000 300,000 2022 $145,000 160,000 6,250 -0- 240,000