a. Compute net cash flow from operating activities using the direct method

b. prepare a statement of cash flows using the indirect method

Comparative balance sheet accounts of Sandhill Inc. are presented below. SANDHILL INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,900 $34,100 Accounts Receivable 70,400 60,300 Inventory 29,900 24,000 Equity investments 22,100 38,300 Machinery 30,200 18,900 Buildings 67,900 56,800 Land 7,400 7,400 $269,800 $239,800 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 Accumulated Depreciation-Machinery 5,600 2,200 Accumulated Depreciation-Buildings 13,400 8,900 Accounts Payable 35,300 24,700 Accrued Payables 3,400 2,600 Long-Term Notes Payable 21,000 30,800 Common Stock, no-par 150,000 125,000 Retained Earnings 38,900 44,100 $269,800 $239,800 Additional data (ignoring taxes): 1. Net income for the year was $40,900. 2. 3. Cash dividends declared and paid during the year were $21,100. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. Equity investments (level of ownership is less than 20%) that cost $25,200 were sold during the year for $29,000. No unrealized gains and losses were recorded on these investments in 2020. 4. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. Sandhill's 2020 income statement follows (ignoring taxes). Sales revenue $538,000 Less: Cost of goods sold 380,200 157,800 Gross margin Less: Operating expenses (includes $8,650 depreciation and $5,364 bad debts) 119,900 37,900 Income from operations Other: Gain on sale of investments $3,800 Loss on sale of machinery (800) 3,000 Net income $40,900