Question 1 M&L Corp. recently completed its 2019 operations. The company's balance sheets (statements of financial position) and income statement (statement of profit or loss) are as follows. M&L Corporation Income Statement For Year Ended December 31, 2019 M&L Corporation Balance Sheets 31 December 2019 and 2018 1,905,000 (810,000) 1,095,000 (616,860) 2019 2018 Assets Cash Accounts Receivable Merchandise Inventory Prepaid Expense Equipment Accumulated Depreciation- Equipment Total Assets 297,420 210,000 614,400 450 201,000 (75.660) 1,247,610 198,000 166,500 600.000 4.680 264,000 (72.600) 1,160,580 Sales Cost of goods sold Gross profit Operating expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes Net income 36,600 514,740 (82,710) 432.030 Additional information: a. Issued new ordinary shares for cash. 240,000 b. Operating expense includes depreciation expense of $46,860. c. Declared and paid cash dividends. Liabilities and Equity Accounts Payable Short-term Notes Payable Long-term Notes Payable Ordinary Shares Retained Earnings Total Liabilities and Equity 141,000 24,000 30,000 577,500 475,110 1,247.610 d. Sold equipment costing $93,000 for cash. 180,000 562,500 178.080 1.160,580 Required: Calculate cash flows from operating activities only using the direct method. You are required to show the calculations of all individual cash flow items in operating activities clearly, not just the final answers, Marks will be deducted from answer without supporting calculations. 2 "We only need the statement of profit or loss income statement) or statement of financial position to analyze the cash inflows and cash outflows of a company. Do you agree with the statement above? Explain and illustrate your answer with two examples