Headland Inc., a greeting card company, had the following statements prepared as of December 31, 2020. HEADLAND INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 | | | 12/31/20 | | 12/31/19 | Cash | | $5,900 | | | $7,000 | | Accounts receivable | | 62,000 | | | 51,500 | | Short-term debt investments (available-for-sale) | | 34,700 | | | 17,900 | | Inventory | | 39,700 | | | 60,400 | | Prepaid rent | | 4,900 | | | 4,100 | | Equipment | | 154,300 | | | 130,500 | | Accumulated depreciationequipment | | (35,300 | ) | | (25,200 | ) | Copyrights | | 45,600 | | | 49,700 | | Total assets | | $311,800 | | | $295,900 | | | | | | | | | Accounts payable | | $46,200 | | | $40,400 | | Income taxes payable | | 4,000 | | | 6,000 | | Salaries and wages payable | | 8,100 | | | 3,900 | | Short-term loans payable | | 8,000 | | | 9,900 | | Long-term loans payable | | 60,200 | | | 69,300 | | Common stock, $10 par | | 100,000 | | | 100,000 | | Contributed capital, common stock | | 30,000 | | | 30,000 | | Retained earnings | | 55,300 | | | 36,400 | | Total liabilities & stockholders equity | | $311,800 | | | $295,900 | | HEADLAND INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 | Sales revenue | | | | $335,600 | Cost of goods sold | | | | 174,600 | Gross profit | | | | 161,000 | Operating expenses | | | | 120,700 | Operating income | | | | 40,300 | Interest expense | | $11,400 | | | Gain on sale of equipment | | 2,100 | | 9,300 | Income before tax | | | | 31,000 | Income tax expense | | | | 6,200 | Net income | | | | $24,800 | Additional information: 1. | | Dividends in the amount of $5,900 were declared and paid during 2020. | 2. | | Depreciation expense and amortization expense are included in operating expenses. | 3. | | No unrealized gains or losses have occurred on the investments during the year. | 4. | | Equipment that had a cost of $19,800 and was 70% depreciated was sold during 2020. | Prepare a statement of cash flows using the direct method. | | | | |