Short-Answer Question (10 marks) The following information and financial statements excerpts pertain to Liquidity, Inc. All short term investments (securities available for sale) were purchased on 12/31/18 and sold during 2019. The company entered a lease agreement on 12/31/19. Fixed assets with a net book value of $15 were sold during the year. The company repaid the current portion of long-term debt during the year. Dividend was declared and partially paid. 2018 2019 Assets Cash Short term investments Accounts receivable Inventory Prepaid general expenses Fixed assets under capital lease, net Fixed assets, net 165 228 498 422 Liabilities and stockowners' equity Accounts payable Wages payable Tax payable Dividend payable Current portion of long term debt Obligations under capital leases Long term debt Common stock Retained earnings 183 180 150 163 26 30 422 498 2018 2019 426 310 116 Revenues, net Cost of goods sold Gross margin General expenses Wages expenses Depreciation expense Interest expense Loss on sale of fixed assets Gain on sale of securities available for sale Tax expenses Net income 106 10 Required: 1. Prepare the statement of cash flows for the year 2019 using the direct method. (5 marks) 2. Reconcile net income and net cash flows from operating activities for the year 2019