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

Additional information:
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 creditors; accrued liabilities relate 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.
Instructions
(a) Prepare the statement of cash flows, using the indirect method.
(b) Nackawic's cash position increased by 75% between 2017 and 2018. Identify the primary reason(s) for this significant increase.

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NACKAWIC INC. Statement of Financial Position December 31 2018 2017 Assets Cash Accounts receivable Inventory Long-term investments Equipment Accumulated depreciation Total assets $82,70O47,250 80,800 37,000o 131,900102,650 94,500 107,000 290,000 205,000 (49,500) (40,000) $630,400 $458,9o0 ar er Accounts payable Accrued liabilities Bank loan payable Common shares Retained earnings $62,70O 48,280 12,10018,830 140,000 70,000 240,000 200,000 175,600 121,790 Total liabilities and shareholders' equity $630,400 $458,900 NACKAWIC INC. Income Statement Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expense:s ncome from operations Other revenues and expenses Interest expense Realized loss on sale of long-term investments Income before income tax Income tax expense Net income $317,500 99,460 218,040 82,120 135,920 $12,940 7,500 20,440 115,480 27,670 $ 87,810