Question

Indigo Corp. uses the direct method to prepare its statement of cash flows and follows IFRS....

Indigo Corp. uses the direct method to prepare its statement of cash flows and follows IFRS. Indigo’s trial balances at December 31, 2020 and 2019, were as follows:

Debits Dec. 31,
2020
Dec. 31,
2019
Cash $55,090 $31,090
Accounts Receivable 33,520 30,270
Inventory 30,630 47,000
Property, Plant, and Equipment 96,040 90,410
Cost of Goods Sold 258,290 385,700
Selling Expenses 133,100 167,100
Administrative Expenses 144,900 156,200
Interest Expense 15,600 28,600
Income Tax Expense 20,200 56,200
$787,370 $992,570
Credits
Allowance for Doubtful Accounts $1,440 $1,100
Accumulated Depreciation 26,990 25,000
Accounts Payable 25,000 15,500
Income Taxes Payable 20,680 29,190
Deferred Income Tax Liability 5,710 5,010
8% Callable Bonds Payable 46,520 45,770
Common Shares 53,600 22,000
Retained Earnings 44,700 64,600
Sales Revenue 562,730 784,400
$787,370 $992,570


Additional information:

1. Indigo purchased $5,630 of equipment during 2020.
2. Bad debt expense for 2020 was $5,500 and write offs of uncollectible accounts totalled $5,330.
3. Indigo has adopted the policy of classifying the payments of interest as operating activities on the statement of cash flows.


Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2020, using the direct method.

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Answer #1

Cash flow from operating Activities (Direct Method) Cash Receipts from Customer Cash paid to supplicirs & Employees - Cash Ge

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