Using the direct method

Vaughn's Custom Clothing Ltd. (VCC) sells branded clothing to resorts and corporations. The company's comparative financial statements are presented below. VAUGHN'S CUSTOM CLOTHING LTD. Following is additional information concerning VCC's transactions during the year ended December 31,2023 : - Equipment costing $35,000 was purchased by paying $26,000 cash and issuing 400 common shares. - Equipment costing $72,000 that was purchased at the beginning of 2022 was sold at the end of 2023 for $40,000. Straightline depreciation had been used with an expected asset life of 5 years and a residual value of $0. - The "other expenses" relate to prepaid items. - In order to supplement its cash, VCC increased its bank loan by $9,000. - Cash dividends of $30,175 were paid at the end of the fiscal year. - Cost of sales includes $175,000 of direct labour costs