Tuit Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2023:

Additional information:

1. Dividends on common shares in the amount of $6,000 were declared and paid during 2023. Dividends paid are treated as financing activities.

2. Depreciation expense is included in operating expenses, as is salaries and wages expense of $69,000.

3. Equipment with a cost of $20,000 that was 70% depreciated was sold during 2023.

Instructions

a. Prepare a statement of cash flows using the direct method.

b. Prepare a statement of cash flows using the indirect method.

c. Does Tuit have any options on how to classify interest and dividends paid on the statement of cash flows?

d. From the perspective of an investor who is interested in investing in mature, successful companies, comment on Tuit’s sources and uses of cash by analyzing the company’s statement of cash flows.

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Tuit Inc. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Goodwill Total assets Accounts payable Income tax payable Salaries and wages payable Short-term loans payable Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity 2023 $ 53,625 58,000 40,000 5,000 154,000 (35,000) 20,000 $295,625 $ 46,000 4,000 8,000 8,000 60,000 130,000 39,625 $295,625 2022 $ 25,000 51,000 60,000 4,000 130,000 (25,000) 50,000 $295,000 $ 40,000 6,000 4,000 10,000 69,000 130,000 36,000 $295,000