Base your answers to the following questions on the 2017 financial statements for Brick Brewing Co. Limited in Exhibits 1.28A to 1.28C. In the questions below, the year 2017 refers to Brick Brewing’s fiscal year ended January 31, 2017, and the year 2016 refers to the prior year ended January 31, 2016.

EXHIBIT 1.28A Brick Brewing Co. Limited’s 2017 Statement of Financial Position

EXHIBIT 1.28B Brick Brewing Co. Limited’s 2017 Statements of Comprehensive Income

EXHIBIT 1.28C Brick Brewing Co. Limited’s 2017 Statements of Cash Flows

Required 

a. Brick Brewing’s financial statements do not include the word “consolidated” in their title. What does this tell you about the company’s structure?

b. Brick Brewing prepared a classified statement of financial position. Calculate the difference between current assets and current liabilities at the end of 2017, and at the end of 2016. This amount is referred to as working capital. Did the company’s working capital improve in 2017? Explain.

c. Find the following amounts in Brick Brewing’s statements:

i. Revenues in 2017

ii. Cost of sales in 2017

iii. Gross profit (as a dollar amount and as a percentage) in 2017

iv. Selling, marketing, and administration expenses in 2016

v. Income tax expense in 2016

vi. Net income in 2017

vii. Intangible assets at the end of 2017

viii. Accounts receivable at the beginning of 2017

ix. Share capital at the end of 2017

x. Property, plant, and equipment at the end of 2017

xi. Cash flows from operating activities in 2017

xii. Cash payments to purchase property, plant, and equipment in 2017

xiii. Cash used for the payment of dividends in 2017

d. Did Brick Brewing finance the company’s assets mainly from creditors (total liabilities) or from shareholders (shareholders’ equity) in 2017? Support your answer with appropriate calculations.

e. List the two largest sources of cash and the two largest uses of cash in 2017. (Consider cash generated from operating activities to be a single source or use of cash.)

f. Suggest some reasons why Brick Brewing’s net income was $3,996,812 in 2017, yet cash provided by operating activities was $9,768,209.

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BRICK BREWING CO. LIMITED Statement of Financial Position January 31, January 31, 2016 Notes 2017 ASSETS Non-current assets Property, plant and equipment 12 $21,709,425 $21,986,070 Intangible assets 13 15,499,186 15,375,392 Construction deposits 2,462,328 Deferred income tax assets 11 1,262,769 39,670,939 38,624,231 Current assets Cash 2,831,959 393,645 Accounts receivable 14 7,035,714 6,176,421 Inventories 15 5,619,329 3,291,529 Prepaid expenses 354,650 593,180 16,080,182 $55,751,121 10,216,245 $48,840,476 TOTAL ASSETS January 31, 2017 January 31, Notes 2016 LIABILITIES AND EQUITY Equity Share capital 16 $39,651,096 $39,526,573 Share-based payments reserves 17 943,565 932,201 (4,933,195) Deficit (2,758,560) TOTAL EQUITY 37,836,101 35,525,579 Non-current liabilities Provisions 388,548 19 411,599 Obligation under finance lease 4,523,152 20 3,781,855 Long-term debt 21 2,498,580 1,548,584 Deferred income tax liabilities 82,389 11 6,774,423 6,460,284 Current liabilities Accounts payable and accrued liabilities 23 9,655,405 4,908,722 Current portion of obligation under finance lease Current portion of long-term debt 20 741,297 713,699 21 743,895 1,232,192 11,140,597 6,854,613 TOTAL LIABILITIES 17,915,020 13,314,897 COMMITMENTS 25, 26 TOTAL LIABILITIES AND EQUITY $55,751,121 $48,840,476 BRICK BREWING CO. LIMITED Statements of Comprehensive Income Years ended January 31, 2017 and 2016 January 31, January 31, Notes 2017 2016 Revenue $45,176,380 $37,609,568 Cost of sales 29,464,917 27,075,078 Gross profit 15,711,463 10,534,490 Selling, marketing and administration expenses 9,248,039 7,367,411 Other expenses 8,9 643,273 641,474 Finance costs 10 478,181 478,945 Gain on disposal of property, plant and equipment (205,912) Income before tax 5,341,970 2,252,572 Income tax expense 11 1,345,158 658,392 Net income and comprehensive income for the year $ 3,996,812 S 1,594,180