Comparative balance sheet accounts of Ayayai Inc. are presented below. AYAYAI INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,900 $33,600 Accounts Receivable 70,600 60,500 Inventory 29,900 24,000 Equity investments 22,100 38,800 Machinery 30,300 18,700 Buildings 66,900 56,500 Land 7,600 7,600 $269,300 $239,700 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 Accumulated DepreciationMachinery 5,600 2,200 Accumulated DepreciationBuildings 13,700 9,000 Accounts Payable 35,300 24,700 Accrued Payables 3,400 2,600 Long-Term Notes Payable 20,800 31,200 Common Stock, no-par 150,000 125,000 Retained Earnings 38,300 43,500 $269,300 $239,700 Additional data (ignoring taxes): 1. Net income for the year was $40,700. 2. Cash dividends declared and paid during the year were $20,900. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $24,900 were sold during the year for $28,600. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. Ayayais 2020 income statement follows (ignoring taxes). Sales revenue $535,200 Less: Cost of goods sold 377,900 Gross margin 157,300 Less: Operating expenses (includes $8,850 depreciation and $5,817 bad debts) 119,500 Income from operations 37,800 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800 ) 2,900 Net income $40,700 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities $ (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).

AYAYAI INC. Statement of Cash Flows (Indirect Method) Adjustments to reconcile net income to