In: Accounting
Presented below is the comparative balance sheet for Diatessaron Inc., a private company reporting under ASPE, at December 31, 2021, and 2020:
DIATESSARON INC.
Balance Sheet
December 31
Assets 2021 2020
Cash $ 67,000 $ 98,000
Accounts receivable 101,000 75,000
Inventory 205,000 155,500
Long-term investment 101,500 0
Property, plant, and equipment 535,000 460,000
Accumulated depreciation (162,500) (140,000)
$847,000 $648,500
Liabilities and Shareholders' Equity
Accounts payable $ 57,500 $ 47,000
Dividends payable 6,000 0
Income tax payable 14,000 15,000
Long-term notes payable 25,000 0
Common shares 630,000 525,000
Retained earnings 114,500 61,500
$847,000 $648,500
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DIATESSARON INC.
Income Statement
Year Ended December 31, 2021
Sales $663,000
Cost of goods sold 432,000
Gross profit 231,000
Operating expenses $147,500
Loss on sale of equipment 3,000 150,500
Profit from operations 80,500
Interest expense 3,000
Interest revenue (4,500) (1,500)
Profit before income tax 82,000
Income tax expense 14,000
Profit $ 68,000
Additional information:
Instructions
a. Can you show me a cash flow statement for the year using the indirect method.
b. Can you show me a cash flow statement for the year using the direct method.