Question

Whiskey Industries Ltd., a Nanaimo, British Columbia–based company, has a December 31 year end. The company’s comparative statement of financial position and its statement of income for the most recent fiscal year are presented here, along with some additional information:

1.		During the year, Whiskey Industries sold, for $470 cash, equipment that had an original cost of $940 and a net carrying amount of $190.
2.		Whiskey Industries borrowed an additional $7,520 by issuing notes payable in 2020.
3.		During the year, the company purchased a piece of land for a future manufacturing site for $188,000. The land was purchased with no money down and the company entered into a mortgage payable for the full amount.

WHISKEY INDUSTRIES LTD. Statement of Financial Position As at December 31, 2020
		2020		2019
Assets
Current assets
Cash		$5,690		$18,330
Accounts receivable		9,400		18,800
Prepaid rent		560		470
Inventory		37,600		28,200
Total current assets		53,250		65,800
Manufacturing equipment		149,460		94,000
Accumulated depreciation, manufacturing equipment		(65,050	)	(47,000	)
Land		188,000		0
Total assets		$325,660		$112,800
Liabilities and shareholders’ equity
Current liabilities
Accounts payable		$10,340		$5,640
Wages payable		560		380
Dividends payable		440		280
Total current liabilities		11,340		6,300
Mortgage payable		188,000		0
Notes payable		43,240		37,600
Common shares		27,260		23,500
Retained earnings		55,820		45,400
Total liabilities and shareholders’ equity		$325,660		$112,800

WHISKEY INDUSTRIES LTD. Statement of Income For the year ended December 31, 2020
Sales		$122,200
Cost of goods sold		75,200
Gross margin		47,000
Expenses
Rent expense		6,670
Wages expense		9,020
Depreciation expense		18,800
Interest expense		560
Income tax expense		490
Gain on sale of equipment		(280)
Net income		$11,740

(a)

Using the information above, prepare the statement of cash flows for Whiskey Industries Ltd. for the year ended December 31, 2020, 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).)

Supplementary disclosures:
Cash paid for interest				$
Cash paid for income tax				$

Non-cash investing and financing activities:

During the year, land with a value of $  was acquired by signing a mortgage payable for the full amount.

Answer 1

WHISKEY INDUSTRIES LTD
Statement of Cashflows
For the Year Ended December 31, 2020
Cash flows from operating activities
Net income	$    11,740
Depreciation	$    18,800
Gain on sale of equipment	$        (280)
Decrease in accounts receivable	$    9,400
Increase in prepaid rent	$        (90)
increase in inventories	$ (9,400)
Increase in accounts payable	$       4,700
Increase in wages payable	$ 180
Net cash provided by operating activities		$    35,050
Cash flows from investing activities
Purchase of Equipment	$ (56,400)		94,000 - 149,460 - 940
Proceeds from the sale of equipment	$          470
Net cash used by investing activities		$ (55,930)
Cash flows from financing activities
issuance of common shares	$       3,760
issuance of note payable	$       7,520
Repayment of note payable	$    (1,880)		43,240 - 7,520 - 37,600
Payment of cash dividends	$    (1,160)		55,820-45,400-11,740-280+440
Net cash provided by financing activities		$    8,240
Net Decrease in cash		$ (12,640)
Cash at beginning of the period		$    18,330
Cash at the end of the period		$       5,690

Supplementary disclosures:
Cash paid for interest expense	$        (560)
Cash paid for income tax expense	$        (490)