Clear Strategy Corp., a strategic marketing consulting firm, began operations on January 1, 2019. Its post-closing trial balance at December 31, 2019 and 2020 is shown below along with some other information.

Other information regarding Clear Strategy Corp. and its activities during 2020:

1. Assume all accounts have normal balances.

2. Share dividends were declared and issued during the year.

3. Equipment was sold for cash equal to its book value.

Required

Using the information provided, prepare a statement of cash flows (applying the indirect method) for the year ended December 31, 2020.

Analysis Component: Clear Strategy Corp.?s comparative post-closing trial balance shows that Receivables, Prepaid Insurance, Accumulated Depreciation, Accounts Payable, Common Shares, and Retained Earnings increased during 2020, while Equipment, Salaries Payable, Income Tax Payable, and Notes Payable decreased during the same period. Explain what most likely caused the changes in these accounts.

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Clear Strategy Corp. Clear Stratogy Corp. Post-Closing Trial Balance ($millions) Income Statement For Year Ended December 31, 2020 ($millions) December 31 Revenues: 2020 Account 2019 $ 485 $ Consulting revenue. 8,750 Cash. 75 Receivables . Expenses: 500 350 Salaries expense Other expenses. Depreciation expense. 4,700 Prepaid insurance. 60 20 1,600 Land 1,240 1,240 Equipment. 535 745 400 Accumulated depreciation 360 85 Total expenses 6,700 Accounts payable. Salaries payable.. Income tax payable. 155 70 Profit from operations 2,050 20 45 Income tax expense. 350 85 250 Profit 1,700 Notes payable. 175 1,655 800 Common shares. 200 Retained earnings. 1,225 125