question 3. P13-12A The income statement and unclassified statement of financial position for E-Perform, Inc. follow:

E-PERFORM, INC. Statement of Financial Position December 31
	2018	2017
Assets
Cash	$ 97,800	$ 48,400
Held for trading investments	128,000	114,000
Accounts receivable	75,800	43,000
Inventory	122,500	92,850
Prepaid expenses	18,400	26,000
Equipment	270,000	242,500
Accumulated depreciation	(50,000)	(52,000)
Total assets	$662,500	$514,750
Liabilities and Shareholders' Equity
Accounts payable	$93,000	$77,300
Accrued liabilities	11,500	7,000
Bank loan payable	110,000	150,000
Common shares	200,000	175,000
Retained earnings	248,000	105,450
Total liabilities and shareholders' equity	$662,500	$514,750
E-PERFORM, INC. Income Statement Year Ended December 31, 2018
Sales		$492,780
Cost of goods sold		185,460
Gross profit		307,320
Operating expenses		116,410
Income from operations		190,910
Other revenues and expenses
Unrealized gain on held for trading investments	$14,000
Interest expense	(4,730)	9,270
Income before income tax		200,180
Income tax expense		45,000
Net income		$155,180

Additional information:

1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. An unrealized gain on held for trading investments of $14,000 was recorded.
3. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 long-term bank loan payable.
4. Old equipment having an original cost of $57,500 was sold for $1,500.
5. Accounts payable relate to merchandise creditors.
6. Some of the bank loan was repaid during the year.
7. A dividend was paid during the year.
8. Operating expenses include $46,500 of depreciation expense and a $7,500 loss on disposal of equipment.

Instructions

(a) Prepare the statement of cash flows, using the direct method.

(b) E-Perform's cash position more than doubled between 2017 and 2018. Identify the primary reason(s) for this significant increase.