5 LAG Network Inc.'s balance sheet and income statement are as follows: LAG Network Inc. Income Statement For Year Ended December 31, 2020 Sales References Cost of goods sold Gross profit Operating expenses: Depreciation expense Other expenses Total operating expenses Profit from operations Income taxes Profit $ 25,200 232,800 $ 928,600 556,200 $ 372,400 258,000 $ 114,400 18,600 $ 95,800 Assets LAG Network Inc. Comparative Balance Sheet Information Cash Accounts receivable Merchandise inventory Equipment December 31 2020 $ 81,190 42,400 284,710 154,400 (71,800) $ 490,900 Accumulated depreciation Total assets Liabilities and Equity Accounts payable Income taxes payable Common shares Retained earnings Total liabilities and equity $ 490,900 $ 31,200 11,600 363,000 85,100 2019 $ 54,400 37,600 247,800 138,400 (46,600) $ 431,600 $ 43,800 10,200 337,500 40,100 $ 431,600 Additional information regarding LAG Network Inc.'s activities during 2020: a. Equipment is purchased for $16,000 cash. b. 10,200 common shares are issued for cash at $2.50 per share. c. Declared and paid $50,800 of cash dividends during the year. Other information regarding LAG Network Inc.: a. All sales are credit sales. b. All credits to accounts receivable are receipts from customers. c. All purchases of merchandise are on credit. d. All debits to accounts payable result from payments for merchandise. e. Other operating expenses are cash expenses. f. The only decrease in income taxes payable is for payment of taxes. Required: Prepare a statement of cash flows for 2020 using the direct method to report cash inflows and outflows from operating activities. (List any deduction in cash and cash outflows as negative amounts.) LAG NETWORK INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: Cash received from customers Cash flows from investing activities: Cash paid for equipment $ 928,600 $ 928,600 (16,000) (16,000) Cash flows from financing activities: Cash received from issuing common shares $ 25,500 Cash paid for dividends (50,800) (25,300) $ 0