The income statement and unclassified statement of financial position for Blossom, Inc. follow: BLOSSOM, INC. Statement of Financial Position December 31 Assets 2018 Cash $98,400 Held for trading investments 122,000 Accounts receivable 74,000 Inventory 123,700 Prepaid expenses 18,800 Property, plant, and equipment 327,500 Accumulated depreciation (50,000 ) Total assets $714,400 Liabilities and Shareholders' Equity Accounts payable $97,500 Accrued liabilities 10,400 Bank loan payable 108,500 Common shares 250,000 Retained earnings 248,000 Total liabilities and shareholders' equity $714,400 2017 $48,100 115,000 43,000 93,400 26,400 297,000 (53,100) $569,800 $74,000 7,600 189,200 170,000 129,000 $569,800 BLOSSOM, INC. Income Statement Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other revenues and expenses Unrealized gain on held for trading investments $7,000 Interest expense (4.790) Income before income tax Income tax expense Net income $560,750 186,600 374,150 116,440 257,710 2,210 259,920 43,000 $216,920 Additional information: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $7,000 was recorded. 3. New equipment costing $89,000 was purchased for $22,900 cash and a $66,100 long-term bank loan payable. 4. Old equipment having an original cost of $58,500 was sold for $1,800. 5. Accounts payable relate to merchandise creditors. 6. Some of the bank loan was repaid during the year. 7. A dividend was paid during the year. 8. Operating expenses include $47,000 of depreciation expense and a $6,600 loss on disposal of equipment (a) Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis e.g. (15,000).) BLOSSOM, INC. Statement of Cash Flows-Direct Method Year Ended December 31, 2018 Cash flows from operating activities 529750 Cash receipts from customers Cash Payments To suppliers -193400 For operating expenses -52440 For interest -4790 For income taxes - 43000 -293630 Net cash used by operating activities 236120 Cash flows from investing activities Proceeds from disposal of equipment 1800 Purchase of equipment -22900 Net cash used by investing activities -21100 Cash Payments To suppliers -193400 For operating expenses -52440 For interest -4790 43000 For income taxes For income taxes -293630 Net cash used by operating activities 236120 Cash flows from investing activities Proceeds from disposal of equipment $ 1800 -22900 Purchase of equipment Net cash used by investing activities -21100 Cash flows from financing activities Sale of common shares 80000 Repayment of bank loan payable Net cash provided by financing activities Net increase in cash Cash, January 1 Cash, December 31 Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $22,900 cash and issuing a $66,100 bank loan payable