Copeland Antiques reported a net loss of $33,200 for the year ended December 31, 2017. The following items were included on Copeland's balance sheets at December 31, 2017 and 2016:

__________________________12/31/17 __________ 12/31/16

Cash ................................... $ 65,300 ................. $ 46,100

Trade accounts payable ... 123,900 .................... 93,700

Inventories ......................... 192,600 .................. 214,800

Copeland uses the indirect method to prepare its statement of cash flows. Copeland does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2017.

Required

1. Prepare Copeland's 2017 statement of cash flows.

2. Draft a brief memo to the president explaining why cash increased during such an unprofitable year.