Tangent Controls Ltd. is a manufacturer of crash-protected event recorders that are used in railway systems around the world to record event data. These data can be retrieved and analyzed to monitor and improve operations, but also to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has customers across the world, but its largest market is North America. The company has been hurt by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that the latest industry developments, which call for a significant increase in the shipment of oil by railcar, will mean an increase in sales. In the meantime, the company has been seeking new investors and has approached a leading Canadian venture capital firm to see if it might be interested in investing. As part of its approach, Tangent has provided the following financial information for the most recent fiscal year.TANGENT CONTROLS LTD.Statement of Financial PositionAs at September 30 2024 2023 Assets Current assets: Cash$ 0$ 72,000Accounts receivable (net)601,000378,000Inventory 760,000 594,000Total current assets1,361,0001,044,000Equipment1,608,0001,908,000Accumulated depreciation, equipment (1,425,000) (1,440,000)Total assets$ 1,544,000$ 1,512,000Liabilities and shareholders’ equity Current liabilities: Bank indebtedness$ 22,000$ 0Accounts payable 260,000 252,000Total current liabilities282,000252,000Bank loan payable152,000144,000Common shares900,000900,000Retained earnings 210,000 216,000Total liabilities and shareholders’ equity$ 1,544,000$ 1,512,000TANGENT CONTROLS LTD.Statement of IncomeFor the year ended September 30, 2024Sales revenue$6,070,000Cost of goods sold 3,875,000Gross profit2,195,000Wages expense1,580,000Utilities expense290,000Depreciation expense225,000Rent expense79,000Interest expense 47,000Loss from operations(26,000)Gain on sale of equipment 40,000Earnings before income tax14,000Income tax expense 3,000Net income$ 11,000Additional information:During the year, the company repaid principal of $30,000 on its loan payable.During the year, equipment with a net carrying amount of $60,000 was sold.No equipment was purchased during the year.RequiredYou work for the venture capital firm and have been tasked with preparing the statement of cash flows for Tangent using either the direct or indirect method for determining cash flows from operating activities. Prepare the statement.Discuss significant observations from the statement of cash flows that your firm would want to consider.AP5-13A (Determining cash collected from customers and paid to suppliers) Southbend Company had sales of $734,000 for the year. The company reported accounts receivable of $54,000 at the end of last year and $60,000 at the end of this year. Southbend’s cost of goods sold this year was $440,000. In last year’s statement of financial position, the company reported inventory of $62,000 and accounts payable of $32,000. In this year’s statement of financial position, Southbend reported inventory of $66,000 and accounts payable of $38,000.RequiredCalculate the amount of cash that Southbend collected from its customers during the year.Calculate the amount of cash that Southbend paid to its suppliers for inventory during the year. QÏÏÏ=RI...TANGENT CONTROLS LTD.Statement of IncomeFor the year ended September 30, 2024Sales revenueCost of goods soldGross profitWages expenseUtilities expenseDepreciation expenseRent expenseInterest expenseLoss from operationsGain on sale of equipmentEarnings before income taxIncome tax expenseNet income$6,070,0003,875,0002,195,0001,580,000290,000225,00079,00047,000(26,000)40,00014,0003,000$ 11,000 ►Additional information:1. During the year, the company repaid principal of $30,000 on its loan payable.2. During the year, equipment with a net carrying amount of $60,000 was sold.3. No equipment was purchased during the year.Requireda. You work for the venture capital firm and have been tasked with preparing the statement ofcash flows for Tangent using either the direct or indirect method for determining cash flowsfrom operating activities. Prepare the statement.b. Discuss significant observations from the statement of cash flows that your firm would want toconsider. Q¡II=17EAP5-12A (Preparation of statement of cash flows) Tangent Controls Ltd. is a manufacturerof crash-protected event recorders that are used in railway systems around the world to recordevent data. These data can be retrieved and analyzed to monitor and improve operations, but alsoto provide diagnostic data in the event of rail crashes. The small Ottawa-based company hascustomers across the world, but its largest market is North America. The company has been hurtby the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping thatthe latest industry developments, which call for a significant increase in the shipment of oil byrailcar, will mean an increase in sales. In the meantime, the company has been seeking newinvestors and has approached a leading Canadian venture capital firm to see if it might beinterested in investing. As part of its approach, Tangent has provided the following financialinformation for the most recent fiscal year.5-48AssetsCurrent assets:CashTANGENT CONTROLS LTD.Statement of Financial PositionAs at September 30Accounts receivable (net)InventoryTotal current assetsEquipmentAccumulated depreciation, equipmentTotal assetsLiabilities and shareholders' equityCurrent liabilities:$Bank indebtednessAccounts payableTotal current liabilitiesBank loan payable20240601,000760,0001,361,000$ 22,000260,000282,000152,000Common shares900,000Retained earnings210,000Total liabilities and shareholders' equity $ 1,544,000$20231,044,0001,608,000 1,908,000(1,425,000) (1,440,000)$ 1,544,000 $1,512,000$72,000378,000594,0000252,000252,000144,000900,000216,000$ 1,512,000

Question

Tangent Controls Ltd. is a manufacturer of crash-protected event recorders that are used in railway systems around the world to record event data. These data can be retrieved and analyzed to monitor and improve operations, but also to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has customers across the world, but its largest market is North America. The company has been hurt by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that the latest industry developments, which call for a significant increase in the shipment of oil by railcar, will mean an increase in sales. In the meantime, the company has been seeking new investors and has approached a leading Canadian venture capital firm to see if it might be interested in investing. As part of its approach, Tangent has provided the following financial information for the most recent fiscal year.TANGENT CONTROLS LTD.Statement of Financial PositionAs at September 30   2024     2023   Assets  Current assets:  Cash$    0$  72,000Accounts receivable (net)601,000378,000Inventory   760,000   594,000Total current assets1,361,0001,044,000Equipment1,608,0001,908,000Accumulated depreciation, equipment (1,425,000) (1,440,000)Total assets$ 1,544,000$ 1,512,000Liabilities and shareholders’ equity  Current liabilities:  Bank indebtedness$ 22,000$    0Accounts payable  260,000  252,000Total current liabilities282,000252,000Bank loan payable152,000144,000Common shares900,000900,000Retained earnings   210,000   216,000Total liabilities and shareholders’ equity$ 1,544,000$ 1,512,000TANGENT CONTROLS LTD.Statement of IncomeFor the year ended September 30, 2024Sales revenue$6,070,000Cost of goods sold  3,875,000Gross profit2,195,000Wages expense1,580,000Utilities expense290,000Depreciation expense225,000Rent expense79,000Interest expense   47,000Loss from operations(26,000)Gain on sale of equipment  40,000Earnings before income tax14,000Income tax expense  3,000Net income$ 11,000Additional information:During the year, the company repaid principal of $30,000 on its loan payable.During the year, equipment with a net carrying amount of $60,000 was sold.No equipment was purchased during the year.RequiredYou work for the venture capital firm and have been tasked with preparing the statement of cash flows for Tangent using either the direct or indirect method for determining cash flows from operating activities. Prepare the statement.Discuss significant observations from the statement of cash flows that your firm would want to consider.AP5-13A (Determining cash collected from customers and paid to suppliers) Southbend Company had sales of $734,000 for the year. The company reported accounts receivable of $54,000 at the end of last year and $60,000 at the end of this year. Southbend’s cost of goods sold this year was $440,000. In last year’s statement of financial position, the company reported inventory of $62,000 and accounts payable of $32,000. In this year’s statement of financial position, Southbend reported inventory of $66,000 and accounts payable of $38,000.RequiredCalculate the amount of cash that Southbend collected from its customers during the year.Calculate the amount of cash that Southbend paid to its suppliers for inventory during the year. QÏÏÏ=RI...TANGENT CONTROLS LTD.Statement of IncomeFor the year ended September 30, 2024Sales revenueCost of goods soldGross profitWages expenseUtilities expenseDepreciation expenseRent expenseInterest expenseLoss from operationsGain on sale of equipmentEarnings before income taxIncome tax expenseNet income$6,070,0003,875,0002,195,0001,580,000290,000225,00079,00047,000(26,000)40,00014,0003,000$ 11,000 ►Additional information:1. During the year, the company repaid principal of $30,000 on its loan payable.2. During the year, equipment with a net carrying amount of $60,000 was sold.3. No equipment was purchased during the year.Requireda. You work for the venture capital firm and have been tasked with preparing the statement ofcash flows for Tangent using either the direct or indirect method for determining cash flowsfrom operating activities. Prepare the statement.b. Discuss significant observations from the statement of cash flows that your firm would want toconsider. Q¡II=17EAP5-12A (Preparation of statement of cash flows) Tangent Controls Ltd. is a manufacturerof crash-protected event recorders that are used in railway systems around the world to recordevent data. These data can be retrieved and analyzed to monitor and improve operations, but alsoto provide diagnostic data in the event of rail crashes. The small Ottawa-based company hascustomers across the world, but its largest market is North America. The company has been hurtby the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping thatthe latest industry developments, which call for a significant increase in the shipment of oil byrailcar, will mean an increase in sales. In the meantime, the company has been seeking newinvestors and has approached a leading Canadian venture capital firm to see if it might beinterested in investing. As part of its approach, Tangent has provided the following financialinformation for the most recent fiscal year.5-48AssetsCurrent assets:CashTANGENT CONTROLS LTD.Statement of Financial PositionAs at September 30Accounts receivable (net)InventoryTotal current assetsEquipmentAccumulated depreciation, equipmentTotal assetsLiabilities and shareholders' equityCurrent liabilities:$Bank indebtednessAccounts payableTotal current liabilitiesBank loan payable20240601,000760,0001,361,000$ 22,000260,000282,000152,000Common shares900,000Retained earnings210,000Total liabilities and shareholders' equity $ 1,544,000$20231,044,0001,608,000 1,908,000(1,425,000) (1,440,000)$ 1,544,000 $1,512,000$72,000378,000594,0000252,000252,000144,000900,000216,000$ 1,512,000<>

Accepted Answer

The cash flow statement is prepared at the end of the period to know the cash position. It reflects…