The financial statements for Zaibak Corp. for the year ended December 31, 2020, are as follows:

Additional information:

a. The administrative expenses included the following: 

Amortization expense on equipment, $100,000.

Writedown of goodwill, $10,000.

b. Sold equipment for its book value. The equipment cost $430,000 and had been amortized for $60,000.

c. Purchased additional equipment in December for $574,000.

d. Issued preferred shares for an investment purchase of $200,000.

e. Declared and paid cash dividends: preferred, $230,000; common, $250,000.

f. Sold 20,000 preferred shares for $5.00 per share.

g. Paid $90,000 (of which $40,000 was interest) on the loans.

Required

1. Prepare a cash flow statement for Zaibak Corp. for the year ended December 31, 2020, using the indirect method. The investment in the money market fund is a cash equivalent.

2. Did the company improve its cash position in 2020? Give your reasons.

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ZAIBAK CORP. Balance Sheet December 31, 2020 and 2019 Assets 2020 2019 Cash $ 10,000 $ 18,000 Investment in money market fund 40,000 Accounts receivable 189,000 175,000 Inventory 280,000 610,000 Prepaid expenses 30,000 23,000 Equipment 1,798,000 1,654,000 Less: Accumulated amortization 160,000 120,000 Investment 200,000 Goodwill 90,000 100,000 Total assets $2,437,000 $2,500,000 Liabilities $ 176,000 $ 120,000 Accounts payable Salaries payable Loan payable 110,000 100,000 350,000 400,000 Total liabilities 636,000 620,000 Shareholders' equity Preferred shares 800,000 500,000 Common shares 500,000 500,000 Retained earnings 501,000 880,000 Total shareholders' equity 1,801,000 1,880,000 Total liabilities and shareholders' equity $2,437,000 $2,500,000