$*$P$13\mathrm{.}12$B $($LO $5,6)($Prepare statement of cash flows $($direct method$)$ and comment.$)$ Refer to the financial statements presented in P$13\mathrm{.}5$B for Nackawic Inc.

$679\%0$

Nackawic Inc.

Statement of Financial Position

December $31$

$20242023$

Assets

Cash $ $82,700$ $ $47,250$

Accounts receivable $80,80037,000$

Inventory $130,200101,550$

Estimated inventory returns $1,7001,100$

Long$-$term investments $94,500107,000$

Equipment $290,000205,000$

Accumulated depreciation

$(49,500)$

$(40,000)$

Total assets $$630,400$ $$458,900$

Liabilities and Shareholders' Equity

Accounts payable $ $62,700$ $ $48\mathrm{.}280$

Property tax payable $11,20018,130$

Refund liability $900700$

Bank loan payable$-$current portion $126,00060,000$

Bank loan payable$-$non$-$current portion

$14,000$

$10,000$

Common shares $240,000200,000$

Retained earnings $175,600121,790$

Total liabilities and shareholders' equity $$630,400$ $$458,900$

Nackawic Inc.

Statement of Income

Year Ended December $31,2024$

Sales $$317,500$

Cost of goods sold $99,460$

Gross profit $218,040$

Operating expenses $82,120$

Income from operations $135,920$

Other income and expenses

Interest expense

$$12,940$

Realized loss on sale of long$-$term investments $7,50020,440$

Income before income tax $115,480$

Income tax expense $27,670$

Net income $ $87,810$

Additional information regarding $2024$:

$1.$Long$-$term investments were sold for $$5,000,$ resulting in a realized loss of $$7,500.$

$2.$New equipment costing $$141,000$ was purchased for $$71,000$ cash and a $$70,000$ bank loan payable.

$3.$Equipment costing $$56,000$ was sold for $$15,550,$ resulting in a gain of $$8,750.$

$4.$Accounts payable relate to merchandise suppliers; property tax payable relates to operating expenses.

$5.$A dividend was paid during the year.

$6.$Operating expenses include $$58,700$ of depreciation expense and an $$8,750$ gain on disposal of equipment.

$7.$The company issued common shares for $$60,000$ cash and bought back and retired some other common shares at the cost they were originally issued at$.$

Instructions

$*$Prepare the statement of cash flows using the direct method.

$*$Nackawie$\text{'}$s cash position increased by $75\%$ between $2024$ and $2023.$ Identify the primary reason$($s$)$ for this significant increase.

please show calculation for each section of operating activities