Zhang Systems Inc. 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 Zhang Systems Inc. and its activities during 2020:

1. Assume all accounts have normal balances.

2. Cash dividends were declared and paid during the year.

3. Plant assets were sold for cash equal to book value during the year.

Required

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

Analysis Component: The net decrease in cash during 2020 for Zhang Systems Inc. was $75 million. Briefly explain what caused this change using the statement of cash flows prepared above.

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Zhang Systems Inc. Zhang Systems Inc. Post-Closing Trial Balance ($millions) Income Statement For Year Ended December 31, 2020 ($millions) December 31 Revenues: Account 2020 2019 26,700 Sales. $ 54 $ 129 Cash. Cost of goods sold. 19,500 Receivables . 276 372 Gross Profit. 7,200 Merchandise inventory.. 408 261 Expenses: Property, plant, and equipment. 6,900 8,976 Other expenses. 7,050 Accumulated depreciation. 3,699 4,125 Depreciation expense 1,350 Non-current investments 1,560 309 Total expenses Profit (Loss). 8,400 318 Accounts payable. 405 (1,200) Accrued liabilities. 141 117 Bonds payable. Common shares. 1,200 600 2,100 2,700 Retained earnings. 2,700 1,140