TealInc. is a major retailer of road bicycles and a promoter of riding bicycles to work, both to save the environment and improve physical fitness. Financial statements forTealare presented below.

STATEMENT OF FINANCIAL POSITION

December 31

Current Assets 2021 2020

Cash 56,150 20,150

Accounts receivable 24,150 10,150

Inventory 31,750 16,750

Prepaid expenses 15,600 10,600

Total current assets 127,650 57,650

Property and Equipment

Property and equipment 160,300 150,300

Less: Accumulated depreciation 78,900 70,000

Net property and equipment 81,400 80,300

TOTAL ASSETS $209,050 $137,950

Current Liabilities

Accounts payable 12,100 16,000

Salaries payable 10,600 8,600

Interest payable 2,150 3,150

Total current liabilities 24,850 27,750

Loan payable 100,300 60,300

Total Liabilities 125,150 88,050

Shareholders' Equity

Common shares 9,150 350

Retained earnings 74,750 49,550

Total shareholders' equity 83,900 49,900

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $209,050 $137,950

INCOME STATEMENT

For the Years Ended December 31

2021 2020

Sales revenue 609,900 500,000

Cost of sales 415,000 350,000

Gross margin 194,900 150,000

Expenses

Salary expense 136,000 125,000

Interest expense 3,500 2,400

Other expenses 6,000 3,000

Depreciation expense 14,900 8,000

Total expenses 160,400 138,400

operating income 34,500 11,600

Gain on disposal of equipment 1,100 -

Income tax expense 6,400 1,972

Net income $29,200 $9,628

The following is additional information concerningTeal's transactions during the year ended December 31, 2021:

Equipment costing $40,000was purchased by paying $34,550cash and issuing100shares.

Equipment costing $30,000that was purchased at the beginning of 2020 was sold at the end of 2021 for $25,100. Straight-line depreciation had been used with an expected asset life of10years and a residual value of $0.

The "other expenses" relate to prepaid items.

In order to supplement its cash,Tealborrowed an additional $40,000.

Cash dividends of $4,000were paid at the end of the fiscal year

.Cost of sales includes $185,000of direct labour costs.

Prepare statement of cash flows forTealfor the year ended December 31, 2021, using the direct method.Tealfollows ASPE.Include any note disclosure on non-cash financing and investing transactions.