Accountants for Grech Restaurant Supply Ltd. have developed the following data from the company’s accounting records for the year ended December 31, 2020:

a. Credit sales, $291,950.

b. Income tax expense and payments, $18,950.

c. Cash payments to acquire property, plant, and equipment, $29,700.

d. Cost of goods sold, $191,300.

e. Cash received from issuance of long-term debt, $34,000.

f. Payment of cash dividends, $24,200.

g. Collection of interest, $13,700.

h. Acquisition of equipment by issuing short-term note payable, $18,200.

i. Payment of salaries, $43,800.

j. Cash received from sale of property, plant, and equipment, $11,200, including a $3,400 loss.

k. Collections on accounts receivable, $231,300.

l. Interest revenue, $1,900.

m. Cash receipt of dividend revenue on investment in shares, $2,050.

n. Payments to suppliers, $184,250.

o. Cash sales, $85,950.

p. Depreciation expense, $31,400.

q. Cash received from issuance of short-term debt, $29,800.

r. Payments of long-term debt, $25,000.

s. Interest expense and payments, $16,650.

t. Salaries expense, $47,650.

u. Collections of notes receivable, $24,000.

v. Cash received from sale of investments, $4,550, including $1,000 gain.

w. Payment of short-term note payable by issuing long-term note payable, $31,500.

x. Cash balance:

December 31, 2019—$39,650

December 31, 2020—$?

Required

1. Prepare Grech’s cash flow statement for the year ended December 31, 2020, reporting operating activities by the direct method. Include a note to the financial statements providing a summary of non-cash investing and financing activities. Assume that the business has adopted IFRS and has elected to place all dividend and interest receipts and payments into operating activities.

2. Assume that Grech Restaurant Supply Ltd. has adopted IFRS and has elected to classify cash inflows from interest and dividends as investing activities and cash outflows for the payment of interest and dividends as financing activities. How would this election change the balances in the three sections of the cash flow statement? Note the balances in each section and comment.