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PI8.7 The financial statements of Ernest Banks Ltd appear below. ERNEST BANKS LTD Statement of Financial Position as at 31 December Assets 2014 Cash $ 11 500 Accounts receivable 12 000 Inventory 10 000 Prepaid expenses 10000 Land 20 000 Property, plant and equipment 100 000 Less: Accumulated depreciation (25000) Total assets $ 138 500 2013 $ 6500 16 500 13 500 6 500 20 000 112 500 (33750) $141 750 Liabilities and Shareholders' equity Accounts payable Accrued expenses payable Interest payable Income taxes payable Bonds payable Share capital Retained earnings Total liabilities and shareholders' equity $ 4500 4750 500 1 500 25 000 61 500 40 750 $ 138500 $ 9250 3750 750 1 000 40 000 52 500 34 500 $141 750 ERNEST BANKS LTD Income Statement for the year ended 31 December 2014 $300 000 1250 $301 250 Income Sales revenue Gain on sale of PPE assets M S 2100 Less: Expenses Cost of sales Other expenses (excluding depreciation) Depreciation expense Interest expense Income tax expense Profit 250 000 30 000 3750 2 500 4500 290 750 $ 10500 Additional information: 1. PPE assets were sold at a sales price of $31250. 2. Additional equipment was purchased at a cost of $30 000 3. Dividends of $4250 were paid. 4. All sales and purchases were on account. 5. Bonds were redeemed at face value. 6. Additional shares were issued for cash. Required Prepare a statement of cash flows using the indirect method. *** Data for Ernest 1. Are cement of cash flows for mest Bank Ind for the year ended 31 December 20 ar ended 31 December 2014

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