E11-36B. (Learning Objectives 4, 5, 6, 7: Preparing and analyzing the statement of cash flows-direct method) The Income Statement and additional data of Happy Life, Inc., follow: A1 . Happy Life, Inc. Income Statement Year Ended November 30, 20X6 223,000 10.500 233,500 2 Revenues: 3 Sales revenue 4 Dividend revenue 5 Expenses: 6 Cost of goods sold 7 Salary expense 8 Depreciation expense 9 Advertising expense 10 Interest expense 11 Income tax expense 12 Net income 13 102,000 42,000 19,000 14,000 4,500 8.000 189.500 44,000 Additional data: a. Collections from customers are 17,500 more than sales. b. Payments to suppliers are 1.100 more than the sum of cost of goods sold plus advertis- ing expense. e. Payments to employees are 1.800 less than salary expense. d. Dividend income, interest expense, and income tax expense equal their cash amounts. e. Acquisition of PPE is 158,000. Of this amount. 110,000 is paid in cash and 48.000 by signing a note payable. f. Proceeds from sale of land total 24.000, g. Proceeds from issuance of shares total 88.000. h. Payment of long-term note payable is 14,000. i. Payment of dividends is 8,000. j. Cash balance. November 30, 20X5. was 22.000. Requirements 1. Prepare Happy Life, Inc.'s statement of cash flows and accompanying schedule of noncash investing and financing activities. Report operating activities by the direct method. 2. Evaluate Happy Life's cash flows for the year, including its free cash flow and cash real- ization ratio. In your evaluation, review all three categories of cash flows and give the reason for your evaluation