Graphene Plastics Company imports graphite from Australia for conversion to graphene to make hockey sticks in Canada. As CEO, you are busy preparing a loan application, which asks for a cash flow statement for the most recent fiscal period. You have the following financial information.

Additional information:
During the year, Graphene sold a piece of its equipment. The equipment sold had originally cost $74,000 and was sold for $15,000.

Required

a. Using the information above, prepare Graphene’s statement of cash flows for the year ended October 31, 2020, using the indirect method.

b. Determine the cash flows from operating activities using the direct method.

Transcribed Image Text:

GRAPHENE PLASTICS COMPANY Comparative Statement of Financial Position Oct. 31, 2020 Oct. 31, 2019 Assets $ 76,000 $ 80,000 Cash Accounts receivable (net) 120,000 135,000 Inventory 210,000 176,000 Total current assets 406,000 391,000 Equipment 300,000 230,000 Accumulated depreciation (145,000) $ 561,000 (170,000) $ 451,000 Total assets Liabilities and sharcholders' equity Current liabilities: $ 80,000 $ 65,000 Accounts payable 22,000 Dividends payable 17,000 Total current liabilities 97,000 87,000 Loan payable 108,000 125,000 Total liabilities 205,000 212,000 Common shares 110,000 110,000 246,000 Retained earnings 129,000 Total shareholders' equity 356,000 239,000 $ 561,000 $ 451,000 Total liabilities and shareholders' equity GRAPHENE PLASTICS COMPANY Statement of Income For the year ended October 31, 2020 Sales revenue $605,000 Cost of goods sold 265,000 Gross profit 340,000 Expenses Wages ex pense $50,000 Utilities expenses 20,000 25,000 Depreciation expense Rent expense 15,000 Interest expense 9,000 Total expenses 119,000 Loss on sale of equipment 9,000 Net income $212,000