The statement of income and unclassified statement of financial position for Nackawic Inc. follow:

Nackawic Inc. Statement of Financial Position December 31
	2021	2020
Assets
Cash	$82,700	$47,250
Accounts receivable	80,800	37,000
Inventory	130,200	101,550
Estimated inventory returns	1,700	1,100
Long-term investments	94,500	107,000
Equipment	290,000	205,000
Accumulated depreciation	(49,500)	(40,000)
Total assets	$630,400	$458,900
Liabilities and Shareholders Equity
Accounts payable	$62,700	$48,280
Property tax payable	11,200	18,130
Refund liability	900	700
Bank loan payablecurrent portion	126,000	60,000
Bank loan payablenoncurrent portion	14,000	10,000
Common shares	240,000	200,000
Retained earnings	175,600	121,790
Total liabilities and shareholders equity	$630,400	$458,900

Nackawic Inc. Statement of Income Year Ended December 31, 2021
Sales		$317,500
Cost of goods sold		99,460
Gross profit		218,040
Operating expenses		82,120
Income from operations		135,920
Other income and expenses
Interest expense	$12,940
Realized loss on sale of long-term investments	7,500	20,440
Income before income tax		115,480
Income tax expense		27,670
Net income		$87,810

Additional information regarding 2021:

1. Long-term investments were sold for $5,000, resulting in a realized loss of $7,500.
2. New equipment costing $141,000 was purchased for $71,000 cash and a $70,000 bank loan payable.
3. Equipment costing $56,000 was sold for $15,550, resulting in a gain of $8,750.
4. Accounts payable relate to merchandise suppliers; property tax payable relates to operating expenses.
5. A dividend was paid during the year.
6. Operating expenses include $58,700 of depreciation expense and an $8,750 gain on disposal of equipment.
7. The company issued common shares for $60,000 cash and bought back and retired some other common shares at the cost they were originally issued at.

Instructions

1. Prepare the statement of cash flows, using the indirect method.
2. Nackawics cash position increased by 75% between 2020 and 2021. Identify the primary reason(s) for this significant increase.