Question 4.3 (Total: 30 marks; -3 marks per error)

The controller of Infinity Stone Corporation has provided you with the following information:

Infinity Stone Corporation

Comparative Statement of Financial Position

As at December 31

2020

2019

Cash

$20,500

$12,500

Accounts receivable

34,000

25,500

Inventories

20,000

30,000

Prepaid insurance

2,500

2,000

Equipment

102,000

90,000

Accumulated Depreciation: Equipment

(22,500)

(12,500)

Total assets

$156,500

$147,500

Accounts payable

$23,000

$20,000

Wages payable

4,000

2,000

Interest payable

2,000

3,000

Income taxes payable

4,000

5,000

Long-term note payable

30,000

34,500

Common shares

65,000

65,000

Retained earnings

28,500

18,000

Total Liabilities and Shareholders Equity

$156,500

$147,500

Additional information:

Net income for the fiscal year was $13,500

Equipment that cost $10,000 and was sold for a gain of $1,000 during 2020. The equipments accumulated depreciation was $7,000.

Required

1. Prepare the operating activities section of a statement of cash flows using the indirect method.