Prepare a side-by-side comparative statement contrasting net income items and cash flows from operating (direct method) and explain which of these two financial reports better reflects profitability.

Cash Accounts receivable, net Inventory Investment (long-term) Fixed assets Accumulated depreciation Total Assets 2019 2020 $34,000.00 $34,500.00 $12,000.00 $17,000.00 $16,000.00 $14,000.00 $6,000.00 $80,000.00 $93,000.00 $-48,000.00 $-39,000.00 $100,000.00 $119,500.00 Accounts Payable Bonds payable Common stock Retained Earnings Treasury Stock Total Liabilities and Equity $19,000.00 $12,000.00 $10,000.00 $30,000.00 $50,000.00 $61,000.00 $21,000.00 $28,000.00 $-11,500.00 $100,000.00 $119,500.00 Supplemental information for time period January 1, 2020 through December 31, 2020: Sales on account, $70,000. Purchases on account, $40,000. Depreciation, $5,000. Expenses paid in cash, $18,000 (including $4,000 of interest and $6,000 in taxes) Decrease in inventory, $2,000. Sales of fixed assets for $6,000 cash; cost $21,000 and two-thirds depreciated (loss or gain is included in income) Purchase of fixed assets for cash, $4,000. Acquisition of fixed assets by issue of bonds $30,000 (noncash activity) Sale of investments (long-term) for $9,000 cash. Purchase of treasury stock for cash, $11,500. Retire bonds payable by issuing common stock, i.e. conversion of bonds into common stock, $10,000 (noncash activity) Collections on accounts receivable, $65,000. Sold unissued common stock for cash, $1,000