The comparative statement of financial position and income statement for Puffy Ltd. follows: PUFFY LTD. Statement of Financial Position As at December 31, 2021 2021 2020 Change Assets Cash $53,000 $22,000 $31,000 Accounts receivable 80,000 76,000 4,000 Inventory 180,000 186,000 (6,000) Estimated inventory returns 5,000 3,000 2,000 Long-term investments 70,000 100,000 (30,000) Equipment 265,000 200,000 65,000 Accumulated depreciation (66,000) (32,000) (34,000) Total assets Liabilities and Shareholders' Equity Accounts payable Refund liability Bank loan payable (current portion) Bank loan payable (noncurrent portion) Common shares Retained earnings Total liabilities and shareholders' equity $587,000 $555,000 32,000 $29,000 $41,000 ($12,000) 10,000 6,000 4,000 25,000 20,000 5,000 125,000 180,000 (55,000) 199,000 174,000 25,000 199,000 $587,000 134,000 65,000 $555.000 32,000 PUFFY LTD. Income Statement Net sales Cost of goods sold For the Year Ended December 31, 2021 Gross profit Operating expenses Income from operations Gain on sale of investments Interest expense Other income (expenses) $978,000 751,000 227,000 77,000 150,000 $5,000 (14,000) (9.000) 141,000 26.000 $ 115.000 Income before income tax Income tax expense Net income Additional information: 1. Depreciation expense of $34,000 is included in operating expenses. 2. No equipment was sold during the year. 3. $50,000 of bank loans was repaid during the year with cash. 4. Common shares were issued for $25,000 cash. 5. Assume unexplained changes are from logical sources. Required Prepare a statement of cash flows, in good form, using the direct method.