Preparation of Statement of Cash Flows (Direct Method)
White Horse

Preparation of statement of cash flows (direct method)
White Horse Ltd. has prepared the following comparative statements of financial position at December 31, 2019 and 2020: White Horse adheres to ASPE. $\begin{array}{lrr} & \underline{ 2020 } &\underline{ 2019 } \\\text{Cash }................................................................................. & \$ 99,000 & \$ 51,000 \\\text{ Accounts receivable } ....................................................... & 53,000 & 39,000 \\\text{ Inventory } ...................................................................... & 50,000 & 60,000 \\\text{ Prepaid expenses }......................................................... & 6,000 & 9,000 \\\text{ Property, plant \& equipment }...................................... & 420,000 & 350,000 \\\text{ Accumulated depreciation } ........................................ & (150,000) & (125,000) \\\text{ Goodwill. } ................................................................. & \underline{ 51,000 } & \underline{ 58,000 } \\ & \underline{\$ 529,000} & \underline{ \$ 442,000 }\\ \\\text{ Accounts payable } ........................................................& \$ 51,000 & \$ 56,000 \\\text{ Accruedliabilities } ........................................................ & 20,000 & 14,000 \\\text{ Mortgage payable } ........................................................ & ---- & 150,000 \\\text{ Preferred shares. } ........................................................& 215,000 & ---- \\\text{ Common shares } ........................................................& 200,000 & 200,000 \\\text{ Retained earnings } ........................................................& 43,000 & 22,000 \\\text{ } & \underline{ \$ 529,000 } & \underline{ \$ 442,000 } \\ \end{array}$
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the year. There were no disposals of property, plant and equipment, but new equipment was purchased during 2020.
2. Depreciation expense and a charge for impairment of goodwill have both been included in operating expenses.
3. The Retained Earnings account was debited for cash dividends declared and paid of $ 46,000, and credited for the net income for the year.
The condensed income statement for 2020 is as follows: $\begin{array}{l} \text{Sales } ................................... & \$ 660,000 \\\text{ Cost of sales } .....................& \underline{ 363,000 } \\\text{ Gross profit } .....................& 297,000 \\\text{ Operating expenses }....... & \underline{ 230,000 }\\\text{ Net income }..................... & \$ 67,000 \\ \end{array}$ Instructions
From the information above, prepare a statement of cash flows (direct method) for calendar 2020.