Accountants for Nature’s Design Ltd. have assembled the following data for the year ended December 31, 2020:

Transaction data for 2020:

Required

1. Prepare Nature’s Design Ltd.’s cash flow statement using the indirect method to report operating activities. Include a note regarding non-cash investing and financing activities.

2. Evaluate Nature’s Design Ltd.’s cash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.

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A E 1 2020 2019 Difference 2 Current assets Cash and cash equivalents $ 9,050 $ 8,700 Accounts receivable 17,025 18,425 4 Inventory 29,625 24,125 5 Prepaid expenses 800 525 Note payable (for inventory purchases) Accounts payable Current liabilities 7,575 9,200 7 18,025 16,875 8 Income tax payable 1,475 1,950 Accrued liabilities 12,075 5,800 3. LO 9,