Question 4 (14 marks) Farmiga Inc. Balance Sheet December 31 2014 2013 Assets Cash Accounts Receivable Inventory Long-term Debt Investment Property Plant and Equipment Less: Accumulated Depreciation $120,600 181,800 369,000 176,400 1,008,000 (292,500) $1,563,300 $176,400 135,000 257,400 0 828,000 (252,000) $1,144,800 Liabilities & Shareholder's Equity Accounts Payable Dividends Payable Income Tax Payable Long-term Notes Payable Common Shares Retained Earnings $157,500 10,800 25,200 81,000 1,170,000 118,800 $1,563,300 $117,000 0 28,800 0 945,000 54,000 $1,144,800 Farmiga Inc. Income Statement Year Ended December 31, 2014 Sales Cost of Goods Sold Gross profit $1,137,600 772,200 365,400 $265,500 3,600 269,100 96,300 Operating expenses Loss on Sale of Equipment Profit from Operations Interest expense Interest revenue Profit before Income Tax Income tax expense Profit 5,400 9,900 4,500 100,800 25,200 $75,600 Question 4 (continued) 3 4 Additional Information: 1 Cash Dividends of $10,800 were declared on December 31, 2014, payable January 15, 2015 2 Along term debt investment was acquired for cash at a cost of $175,500 Depreciation expense is included in the operating expenses. The company issued 22,500 common shares for cash on March 31, 2014. The fair value of the shares were $10 per share. The proceeds were used to purchase additional equipment Equipment that originally cost $45,000 was sold during the year for cash. The equipment had a net book value of $16,200 at the time of sale. The company issued a note payable for $90,000 and repaid $9,000 of it by year end. 7 Accounts Payable is used for Merchandise purchases, Accounts Receivable relate to Sales 65,625 shares were outstanding Dec. 31, 2013. 15,625 more common shares were issued Aug 31/201 Westerner Inc. is a private company reporting under ASPE. 5 6 8 9 Required: Prepare a complete Statement of Cash Flow using the Indirect method