Financial statements for E-Perform, Inc. follow:

Additional information:
1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. An unrealized gain on trading investments of $14,000 was recorded.
3. New equipment costing $85,000 was purchased for $25,000 cash
4. Old equipment having an original cost of $57,500 was sold for $1,500.
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 $46,500 of depreciation expense and a $7,500 loss on sale of equipment.
Instructions
(a) Prepare the statement of cash flows, using either (1) the indirect method or (2) the direct method, as assigned by your instructor.
(b) E-Perform's cash position doubled between 2011 and 2012. Identify the primary reason(s) for this significant increase.

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E-PERFORM, INC. Statement of Financial Position December 31 Trading investments 2 122,500 Property, plant, and equipment Accumulated depreciation Liabilities and Shareholders' E Total liabilities and shareholders' equity E-PERFORM, INC. Income Statement Year Ended December 31, 2012 Cost of goods sold Gross profit Operating expenses Profit from operations Other revenues and gains and other $492,780 185,460 307,320 116,410 190,910 expenses and losses $14,000 4,730 Unrealized gain on trading investments Interest expense Profit before income tax Income tax expense Profit 200,180 45,000 $155,180