Accountants for Natures Design Ltd. have assembled the following data for the year ended
December 31, 2017:

Transaction data for 2017:
Acquisition of building by issuing long-term note payable ....................... $33,000
Issuance of common shares, class B, for cash .......................................... $14,050
Net income ............................................................................................. 12,625
Acquisition of farm equipment ............................................................ 18,500
Payment of cash dividends ................................................................. 10,700
Acquisition of long-term investment ....................................... 11,200
Payment of long-term debt ................................................................. 16,950
Amortization expense ......................................................................... 5,075
Collection of loan ............................................................................... 2,575
Retirement of bonds payable by issuing preferred shares ..................... 22,350
Gain on sale of investment .................................................................... 875
Issuance of long-term debt to borrow cash ........................................... 17,750
Sale of long-term investment for cash .................................................. 5,550
Share dividends ................................................................................... 10,150
Required
1. Prepare Natures Design Ltd.'s cash flow statement using the indirect method to report operating activities. Include a note regarding non-cash investing and financing activities.
2. Evaluate Natures Design Ltd.'s cash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.

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December 31 2017 2016 Current accounts (all result from operations) Current assets Cash and cash equivalents Accounts receivable Inventories Prepaid expenses $9,050 17,025 29,625 800 S 8,700 18,425 24,125 525 Current liabilities Notes payable (for inventory purchases) Accounts payable Income tax payable Accrued liabilities 7,575 18,025 1,475 12,075 9,200 16,875 1,950 5,800