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Scenario:

The comparative balance sheet and income statement of Sign Language Hearing Co Ltd, have just been prepared and presented to the owners by the company's accountant. The owners are concerned about the movement in the company's cash and cash equivalent given that the balance sheet does not show or explain the reasons or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners. The owners have asked you to assist with the needed clarification and have out forward the following financial information.

Financial info to be used:

Sign Language Hearing Co Ltd
Comparative Balance Sheet
October 31, 2020, and 2021
	2021	2020
Assets
Cash and cash equivalent	188,000	200,000
Accounts Receivable	230,000	200,000
Inventory	350,000	380,000
Equipment, net	350,000	220,000
Total Assets	1,118,000	1,000,000
Liabilities
Accounts payable	260,000	275,000
Accrued liabilities	95,000	75,000
Income tax payable	65,400	65,400
Bond payable	195,200	105,600
Stockholders' Equity:
Common Stock	155,500	95,300
Retained earnings	650,450	550,300
Treasury stock	(303,550)	(166,600)
Total liabilities and stockholders' equity	1,118,000	1,000,000

Sign Language Hearing Co Ltd
Income Statement
Year Ended October 31,2021
Revenues and gains:
Sales revenue	800,000
Gain on sale of equipment	5,000
Total revenues and gains		805,000
Expenses
Cost of goods sold	480,000
Salary expense	58,500
Depreciation expense	20,000
Rent expense	65,000
Total expenses		623,500
Income before income taxes		181,500
Income tax expense		18,000
Net Profit		163,500
Notes
Purchase of equipment 215,000 Cash receipt from sale of equipment 70,000 Issuance of bonds payable to borrow cash 89,600 Cash receipt from issuance of common stock 60,200 Dividend paid 63,350 Book value of equipment sold 65,000 Purchase of treasury stock 136,950

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