Groovy Limited is a recording studio used by musicians to record music. It began 2020 with \(\$ 95,000\) in cash. During 2020, Groovy earned net income of \(\$ 300,000\), and adjustments to reconcile net income to net cash provided by operations totalled \(\$ 60,000\), a positive amount. Investing activities used cash of \(\$ 400,000\), and financing activities provided cash of \(\$ 70,000\). Groovy ended 2020 with total assets of \(\$ 250,000\) and total liabilities of \(\$ 110,000\).

{Requirements}

1. Identify the items that are not relevant to preparing the statement of cash flows for Groovy Limited and indicate which financial statement reports these items.

2. Prepare Groovy Limited's statement of cash flows for the year ended December 31, 2020.

3. Identify specific types of investing activities that could have used some of Groovy Limited's cash during the year.

4. Identify specific types of financing activities that could have provided Groovy Limited with cash during the year.