Presented below is the comparative balance sheet for Cullumber Inc, a private company reporting under ASPE, at December 31, 2021, and 2020: 2020 $98,000 75,000 CULLUMBER INC. Balance Sheet December 31 Assets 2021 Cash $58,600 Accounts receivable 101,000 Inventory 205,000 Long-term investment 101,500 Property, plant, and equipment 535,000 Less: Accumulated depreciation (162,500) $838,600 Liabilities and Shareholders' Equity 155,500 0 460,000 (140,000) $648,500 $57,500 $47,000 6,000 0 14.000 15,000 Accounts payable Dividends payable Income tax payable Long-term notes payable Common shares Retained earnings 25,000 0 525,000 630,000 106,100 61,500 $838,600 $648,500 CULLUMBER INC. Income Statement Year Ended December 31, 2021 Sales $654,600 432,000 222,600 $147,500 3,000 150,500 72,100 Cost of goods sold Gross profit Operating expenses Loss on sale of equipment Profit from operations Interest expense Interest revenue Profit before income tax Income tax expense Profit 3,000 (4.500) (1,500) 73.600 14.000 $59,600 1. 2. 3. 4 Additional information: Cash dividends of $15.000 were declared. A long-term investment was acquired for cash at a cost of $101.500. Depreciation expense is included in the operating expenses. The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment. Equipment that originally cost $30,000 was sold during the year for cash. The equipment had a carrying value of $9,000 at the time of sale. The company issued a note payable for $28,000 and repaid $3,000 by year end. 7. All purchases of inventory are on credit. Accounts Payable is used only to record purchases of inventory. 5. 6. 8. Prepare a cash flow statement for the year using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g. - 15,000 or in parenthesis e.g. (15,000).) CULLUMBER INC. Cash Flow Statement - Indirect Method Year Ended December 31, 2021 Operating Activities Profit 59600 Adjustments to reconcile profitto Operating Activities Depreciation Expense $ 43500 Loss on Sale of Equipment 3000 Increase in Accounts Receivable 10500 Decrease in Income Tax Payable -1000 -19500 Net Cash Provided by Operating Activities 40100 Investing Activities Sale of Equipment $ > 6000 Purchase of Equipment 36600 Cash, January 1