L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020:

Additional information:

1. Dividends on common shares in the amount of $12,000 were declared and paid during 2020.

2. Depreciation expense of $24,000 is included in operating expenses.

3. Equipment with a cost of $20,000 that was 70% depreciated was sold during 2020.

Instructions

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

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

Transcribed Image Text:

L&G Inc. Comparative Statement of Financial Position December 31 2020 2019 $ 57,600 $ 53,850 Cash Accounts receivable 58,000 51,000 Inventory Prepaid rent Equipment Accumulated depreciation-equipment 40,000 60,000 5,000 4,000 154,000 130,000 (25,000) (35,000) Total assets $279,600 $273,850 2020 2019 Accounts payable Income tax payable Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity $ 46,000 $ 40,000 6,000 69,000 130,000 39,600 130,000 28,850 $279,600 $273,850