Data table

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		McKnight Consulting Ltd.
		Income Statement
		For the Year Ended September 30, 2020
	Revenues
		Consulting revenue		$554,000
	Expenses
		Salaries expense	$302,000
		Amortization expense	60,000
		Rent expense	14,000
		Office supplies expense	22,000
		Insurance expense	4,500
		Interest expense	4,500
		Income tax expense	36,000	443,000
	Net income			$111,000

Additional data:

a.

Acquisition of computer equipment was

$240,000.

Of this amount,

$211,000

was paid in cash and

$35,000

by signing a long-term note payable.

McKnight

Consulting Ltd. sold no computer equipment during fiscal year

2020.

b.

Cash received from sale of land,

$20,100.

c.

Cash receipts from issuance of common shares,

$101,000.

d.

Payment of long-term note payable,

$42,000.

e.

Payment of dividends,

$132,000.

f.

Change in cash balance, $?.

g.

From the comparative balance sheet at September 30:

McKnight Consulting Ltd.
Balance Sheet (partial)
September 30, 2020 and 2019
	2020	2019
Current assets
Cash	$86,000	$54,000
Accounts receivable	20,000	152,000
Office supplies	20,000	12,000
Prepaid expenses	18,000	18,000
Current liabilities
Accounts payable	$72,000	$60,000
Accrued liabilities	40,000	49,000

Use the income statement of McKnight Consulting Ltd. plus these additional data during fiscal year 2020: (Click the icon to view the Income Statement.) (Click the icon to view the additional data.) Required 1. Prepare McKnight Consulting Ltd.'s cash flow statement for the year ended September 30, 2020, using the indirect method. 2. Evaluate McKnight Consulting Ltd.'s cash flows for the year. In your evaluation, mention all three categories of cash flows, and give the reason for your evaluation. Requirement 1. Prepare McKnight Consulting Ltd.'s cash low statement for the year ended September 30, 2020, using the indirect method. (Use parentheses or a minus sign for numbers to be 'subtracted.) McKnight Consulting Ltd. Cash Flow Statement For the Year Ended September 30, 2020 Cash flows from operating activities Net income Add (subtract) items that affect net income and cash flow differently: Amortization expense Decrease in accounts receivable Increase in office supplies Increase in accounts payable Decrease in accrued liabilities Net cash intlow from operating activities Cash flows from investing activities Acquisition of computer equipment Cash receipt from sale of land Net cash outflow from investing activities Cash flows from financing activities Cash receipt from issuance of common shares Payment of long-term note payable Dividends paid Net cash outflow from financing activities Net increase in cash Cash balance at beginning of 2020 Cash balance at end of 2020 financing activities investing activities Non-cash investing and financing activities: Acquisition of equipment by issuing note payable operating activities Requirement 2. Evaluate McKnight Consulting Ltd's cash flows for the year. In your evaluation, mention all three categories of cash flows, and give the reason for your evaluation. The cash flow from and it provided funds to acquire the computer equipment, which is found under The company is fairly strong and has little problem in acquiring | by way of notes and common shares, which is found in the section of the cash flow statement financing activities not satisfactory financing activities computer equipment most of the investing activities very satisfactory investing activities long-term financing none of the operating activities operating activities short term financing