Density1s income statement for the year ended October 31, 2021, had the following condensed information:

Service revenue				$769,000
Operating expenses (excluding depreciation)				$510,000
Depreciation expense				$72,000
Loss on disposal of equipment				$15,400

Density1's statement of financial position included the following comparative data at year end:

		2020		2021
FV-NI investments		$20,000		$18,000
Accounts receivable		$25,400		$19,600
Accounts payable		$30,600		$42,400
Income tax payable		$7,300		$5,300

Additional Information:

• No Investments or other assets were sold other than noted above
• The company uses FIFO for inventory valuation and uses tax guidelines for all other assets and liabilities (equipment loss is fully deductible for tax purposes)
• The company uses a Line of Credit as a floating debt facility and this year they were in a negative cash position
• The companies tax rate is 30% for the current year

1. Prepare the operating activities section of the statement of cash flows using the direct method.
2. Discuss the notes that would be relevant to preparing this Statement of Cash Flows.