Gems Co. uses the indirect method to prepare its statement of cash flows. The following comparative statement
Question:
Gems Co.uses the indirect method to prepare its statement of cash flows. The following comparative statement of financial position for 2021 and 2022 are presented:
At December 31 | ||
2022 | 2021 | |
Property, Plant and Equipment (PPE) | $1 260 000 | $1 050 000 |
Accumulated depreciation | (450 000) | (375 000) |
Patent | 153 000 | 174 000 |
Prepaid expenses | 18 000 | 27 000 |
Inventory | 150 000 | 180 000 |
Accounts receivable | 159 000 | 117 000 |
Cash | 297 000 | 153 000 |
$1 587 000 | $1 326 000 | |
Accounts payable | $ 153 000 | $ 168 000 |
Accrued liabilities | 60 000 | 42 000 |
Mortgage payable | ---- | 450 000 |
Share capital-Preference | 645 000 | ----- |
Share capital-Ordinary | 600 000 | 600 000 |
Retained earnings | 129 000 | 66 000 |
$1 587 000 | $1 326 000 | |
Additional Information:
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earnings account has been charged for dividends of $138 000 and credited for the net income for the year.
The statement of profit or loss for 2022 was as follows:
Sales | $1 980 000 |
Cost of sales | 1 089 000 |
Gross profit | 891 000 |
Operating expenses | 690 000 |
Net income | $ 201 000 |
Create the statement of cash flows (indirect method) for Gems Co. for the year ended December 31, 2022.
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen