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Question 3: (19 points) Quality Kitchen Companys 2021 single-step income statement and comparative balance sheet are provided below: QUALITY KITCHEN COMPANY Income Statement Year Ended December 31, 2021 Revenue $ 920,000 Expenses Cost of goods sold $ 493,500 Salaries 189,000 Other operating expense 73,500 Depreciation expense 25,000 Interest 13,000 Income taxes 18,000 812,000 Profit $ 108,000 QUALITY KITCHEN COMPANY Balance Sheet December 31 2021 2020 Assets Cash $ 14,000 $ 10,000 Accounts receivable 29,000 24,000 Inventory 13,500 17,000 Prepaid expenses 2,000 2,000 Land 250,000 250,000 Building and equipment cost 497,000 422,000 Accumulated depreciation (150,000) (125,000) Total assets $ 655,500 $ 600,000 Liabilities and Shareholders' Equity Accounts payable $ 25,900 $ 22,400 Taxes payable 1,000 3,000 Interest payable 1,500 2,500 Salaries payable 8,000 5,000 Long-term debt 234,000 260,000 Common shares 120,000 100,000 Retained earnings 265,100 207,100 Total liabilities and shareholders' equity $ 655,500 $ 600,000 Additional information: 1. No new long-term debt was taken during the year. 2. New equipment was purchased, and none was sold. 3. Common shares were issued for cash. 4. Cash dividends were paid to common shareholders. 5. All operating expenses were paid in the period incurred. Required: Prepare the cash flow statement for 2021, using the direct method.

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