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Exercise 22-14 (b) (indirect method) Indigo Inc., a greeting card company that follows ASPE, had the...

Exercise 22-14 (b) (indirect method)

Indigo Inc., a greeting card company that follows ASPE, had the following statements prepared as at December 31, 2020:

INDIGO INC.
Comparative Statement of Financial Position
December 31
2020 2019

Cash

$52,795 $25,120

Accounts receivable

58,040 51,090

Inventory

39,980 60,020

Prepaid rent

5,270 4,170

Equipment

157,450 130,110

Accumulated depreciation–equipment

(35,270 ) (25,170 )

Goodwill

20,000 60,000

Total assets

$298,265 $305,340

Accounts payable

$46,250 $40,110

Income tax payable

3,980 6,020

Salaries and wages payable

8,120 4,120

Short–term loans payable

8,040 10,090

Long–term loans payable

60,000 79,000

Common shares

130,000 130,000

Retained earnings

41,875 36,000

Total liabilities and shareholders’ equity

$298,265 305,340
INDIGO INC.
Income Statement
Year Ending December 31, 2020

Sales revenue

$348,085

Cost of goods sold

165,000

Gross margin

183,085

Operating expenses

120,000

Operating income

63,085

Interest expense

$11,600

Impairment loss–goodwill

40,000

Gain on disposal of equipment

(2,300 ) 49,300

Income before income tax

13,785

Income tax expense

4,110

Net income

$9,675


Additional information:

1. Dividends on common shares in the amount of $3,800 were declared and paid during 2020.
2. Depreciation expense is included in operating expenses, as is salaries and wages expense of $72,000.
3. Equipment with a cost of $34,000 that was 70% depreciated was sold during 2020.


Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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