The 2020 income statement and comparative balance sheet of Grace Design Ltd. follow: (Click the icon to view the income statement.) (Click the icon to view the balance sheet.) Grace Design Ltd. had no non-cash financing and investing transactions during 2020. During the year, there were no sales of land or plant and equipment, and no issuances of notes payable. Required 1. Prepare the 2020 cash flow statement by the indirect method. 2. Evaluate the cash flow for this company. Requirement 1. Prepare the 2020 cash flow statement by the indirect method. (Use parentheses or a minus sign for numbers to be subtracted.) Grace Design Ltd. Cash Flow Statement For the Year Ended July 31, 2020 Cash flows from operating activities Net income Add (subtract) items that affect net income and cash flow differently: Amortization expense Increase in accounts receivable Increase in interest receivable Decrease in inventory Increase in prepaid expenses Increase in accounts payable Decrease in interest payable Decrease in salaries payable Decrease in other accrued liabilities Increase in income tax payable Net cash inflow from operating activities Cash flows from investing activities Acquisition of land Acquisition of equipment Net cash outflow from investing activities Cash flows from financing activities Payment of dividends Payment of notes payable Issuance of common shares Net cash outflow from financing activities Net increase (decrease) in cash Cash and cash equivalents, August 1, 2019 Cash and cash equivalents, July 31, 2020 overall. Operations provided cash flows, which is the Requirement 2. Evaluate the cash flow for this company. Grace Design Ltd.'s 2020 cash flows are company. Grace Design Ltd. is investing in and All are signs. source of cash for a healthy Income Statement Grace Design Ltd. Income Statement For the Year Ended July 31, 2020 - Revenues Sales revenue Interest revenue Total revenues 257,000 19,000 276,000 Expenses Cost of goods sold 86,000 Salaries expense 45,000 Amortization expense 4,600 Other operating expenses 12,000 Interest expense 22,000 35,000 Income tax expense 204,600 Total expenses $ 71,400 Net income Balance Sheet Grace Design Ltd. Balance Sheet July 31, 2020 and 2019 2020 2019 Current assets Cash and cash equivalents $ 7,200 $ 6,300 Accounts receivable 47,000 44,000 Interest receivable 2,300 880 Inventory 33,600 75,000 Prepaid expenses 3,700 2,900 Plant and equipment, net Land Total assets Current liabilities Accounts payable 73,000 65,000 109,000 58,000 $ 275,800 $ 252,080 69 $ 35,000 $ 32,400 Interest payable 4,600 5,500 Salaries payable 3,300 7,400 Other accrued liabilities 29,000 34,000 Income tax payable 9,500 8,900 Long-term liabilities Notes payable Shareholders' equity Common shares Retained earnings Total liabilities and shareholders' equity 75,000 90,000 76,000 44,000 43,400 29,880 $ 275,800 $ 252,080