Cash Flows from Operating Activities – Indirect Method
Carla Limited $\quad$

question 86

Essay

Cash flows from operating activities – indirect method
Carla Limited had the following financial statements:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Carla Limited.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Statement of Financial Position
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ As at December 31
$\begin{array}{c}\begin{array}{lll} \text {Cash}\\ \text {Accounts receivable}\\ \text {Inventories}\\ \text {Prepaid insurance}\\ \text {Equipment}\\ \text {Accumulated depreciation-equipment}\\ \text {Total assets}\\\\ \text {Accounts payable}\\ \text {Wages payable}\\ \text {Income taxes payable}\\ \text {Long-term note payable}\\ \text {Common shares}\\ \text {Retained earnings}\\ \text {Total liabilities and shareholders' equity}\end{array}\begin{array}{r}\underline{2020} \\\$ 15,000 \\11,750 \\16,500 \\2,500 \\25,500 \\\underline{(16,250)} \\\underline{\underline{ \$ 55,000}} \\\\ \$ 5,000 \\2,000 \\3,000 \\0 \\15,000 \\\underline{30,000} \\\underline{\underline{ \$ 55,000}}\\ \end{array}\begin{array}{r}\underline{2019} \\\$ 9,750 \\8,750 \\11,750 \\2,000 \\33,500 \\\underline{(17,750)} \\\underline{\underline{\$ 48,000}} \\\\\$ 6,750 \\2,000 \\1,000 \\8,750 \\15,000 \\\underline{14,500} \\\underline{\underline{ \$ 48,000}}\\\end{array}\end{array}$

Additional information:
•Equipment that cost $8,000 was sold for the carrying amount of $3,750.
•Dividends declared and paid were $10,000.
Prepare the operating activities section of a statement of cash flows using the indirect method.