The comparative statement of financial position for Anderson Ltd. shows the following balances at December 31:

Liabilities and Shareholders' Equity

Additional information regarding 2015:
1. Profit was $53,000.
2. A gain of $14,000 was recorded on the disposal of a small parcel of land. No land was purchased during the year.
3. A gain on the disposal of an old building of $28,000 was recorded when it was sold for $40,000 cash. A new building was purchased for $304,000 and depreciation expense on buildings for the year was $45,000.
4. Equipment costing $125,000 was purchased while a loss of $5,000 was recorded on equipment that originally cost
$30,000 and was sold for $4,000.
5. The company took out $350,000 of new bank loans during the year.
6. Dividends were declared and paid and common shares were issued during the year.
Instructions
(a) Prepare the statement of cash flows using the indirect approach.
(b) Did the company manage its noncash working capital effectively?
(c) The company's banker is worried. Why?

Transcribed Image Text:

2015 2014 Assets Cash Accounts receivable Merchandise inventory Land Building Accumulated depreciation-building Equipment Accumulated depreciation-equipment Total assets $ 3,000 35,000 49,000 95,000 477,000 (67,000) 135,000 (18,000) $709,000 S 36,000 20,000 35,000 110,000 263,000 (100,000) 40,000 (10,000) $394,000 payable Accounts Income tax payable Interest payable Bank loan payable-current portion Bank loan payable-non-current portion Common shares Retained earnings Total liabilities and shareholders' equity 14,000 3,000 6,000 26,000 520,000 90,000 50,000 $709,000 35,000 2,000 7,000 20,000 212,000 88,000 30,000 S394,000