Pronghorn's Custom Clothing (PCC) sells branded clothing to resorts and corporations. The company's comparative financial statements are presented below. PRONGHORN'S CUSTOM CLOTHING STATEMENT OF FINANCIAL POSITION December 31 Current Assets 2020 2019 Cash 137,000 73,800 Accounts receivable 30,000 24,200 Inventory 67,000 44,200 Prepaid expenses 10,200 3,200 Total current assets 244,200 145,400 Property and equipment Property and equipment 98,000 135,000 Less: Accumulated depreciation 54,500 52,300 Net property and equipment 43,500 82,700 TOTAL ASSETS $287,700 $228,100 Current liabilities Accounts payable 25,200 33,200 Salaries payable 9,500 5,300 Interest payable 5,000 8,400 Total current liabilities 39,700 46,900 Loan payable 122,000 113,000 Total liabilities 161,700 159,900 Shareholders' equity Common shares 20,900 1,500 Retained earnings 105,100 66,700 Total shareholders' equity 126,000 68,200 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $287,700 $228,100 PRONGHORN'S CUSTOM CLOTHING INCOME STATEMENT For the Years Ended December 31 2020 2019 Sales revenue 855,000 779,000 Cost of sales 652,000 564,000 Gross margin 203,000 215,000 Expenses Salary expense 63,000 87,000 Interest expense 5,100 1,900 Other expenses 8,200 6,300 Depreciation expense 31,000 31,800 Total expenses 107,300 127,000 Operating income 95,700 88,000 Loss on disposal of equipment 3,200 1,000 Income tax expense 23,925 18,200 Net income 68,575 68,800 Following is additional information concerning PCC's transactions during the year ended December 31, 2020: Equipment costing $35,000 was purchased by paying $26,000 cash and issuing 400 common shares. Equipment costing $72,000 that was purchased at the beginning of 2019 was sold at the end of 2020 for $40,000. Straight-line depreciation had been used with an expected asset life of 5 years and a residual value of $0. The "other expenses" relate to prepaid items. In order to supplement its cash, PCC increased its bank loan by $9,000. Cash dividends of $30,175 were paid at the end of the fiscal year. Cost of sales includes $175,000 of direct labour costs. Prepare a statement of cash flows for PCC for the year ended December 31, 2020, using the direct method. CCC follows ASPE. Include any note disclosure on non-cash financing and investing transactions. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000).) Pronghorn's Custom Clothing Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities - Cash Received from Customers 849,200 Cash Paid to Suppliers (507,800) Cash Paid to Employees (58,800) Cash Paid for Interest (8,500) Cash Paid for Taxes (23,925) Net Cash Provided by Operating Activities 250,175 Cash Flows from Investing Activities Cash Paid for Purchase of Equipment (26,000) Proceeds from Sale of Equipment 40,000 Net Cash Provided by Investing Activities 14,000 Cash Flows from Financing Activities Increase in Bank Loan Payable 9,000 Issuance of Common Shares in Partial Payment for Equipment 10,400 Payment of Dividends (30,175) Net Cash Used by Financing Activities (10,775) Increase in Cash 253,400 Opening Cash Balance 73,800 Closing Cash Balance 327,200 Non-cash investing and financing activities Issuance of Common Shares in Partial Payment for Equipment 9,000