The following are the comparative balance sheets and an income statement for Innovation Company: Innovation Company Balance Sheets as December 31 Assets 2020 2019 Cash Accounts Receivable $21,500 $120,000 195,000 105,000 Inventory Long-term investment 180,000 225,000 0 60.000 Totals $396,500 $510,000 Liabilities and shareholders equity Accounts payable $75,000 $120,000 Operating expenses payable 24,000 15,000 Bonds payable 70,000 100,000 Common Stock 125,000 125,000 Retain Earnings Totals Innovation Company Income Statement For the Year Ended December 31, 2020 102,500 150,000 $396,500 $510,000 Sales $560,000 Beginning Inventory $225,000 Purchases 330,000 Goods Available for Sale 555,000 Less: ending inventory 180,000 Cost of good sold 375,000 Gross profit 185,000 Operating expenses 180,000 Income form operations 5,000 Other expenses: Loss on sale of long-term investment (7,500) Net loss (2,500) Additional information: Cash dividends of $45,000 were paid in year 2020. Required: Prepare a statement of cash flows for 2020, using the direct method