Mamma Ltd. had the following comparative statement of financial position:
Mamma Ltd.
Comparative Statement of Financial Position
As at December 31
2020 2019
Cash $20,500 $12,500
Accounts receivable 34,000 25,500
Inventories 20,000 30,000
Prepaid insurance 2,500 2,000
Equipment 102,000 90,000
Accumulated depreciation\---equipment (22,500) (12,500)
Total assets $156,500 $147,500
Accounts payable $23,000 $20,000
Wages payable 4,000 2,000
Interest payable 2,000 3,000
Income taxes payable 4,000 5,000
Long-term debt 30,000 34,500
Bonds payable 0 350
Common shares 65,000 64,650
Retained earnings 28,500 18,000
Total liabilities and shareholders' equity $156,500 $147,500
Additional information:
\\ Net income for the fiscal year was $13,500.
\\ Equipment that cost $10,000 and was sold for a gain of $1,000 during 2020. The
equipment's accumulated depreciation was $7,000.
\\ New debt amounting to 10,000 was incurred during the year.
\\ Conversion of bonds payable to common shares for $350.
Required:
A. Prepare a statement of cash flows in good form using the indirect method (10 points).
B. Discuss briefly your results (2 points).
