A comparative statement of financial position and a statement of earnings for Standard Card Company follow.

Additional information:

The loss on the sale of equipment occurred when a relatively new machine with a cost of $100,000 and accumulated depreciation of $20,000 was sold because a technological change had made it obsolete.

Required

a. Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method.

b. Determine the cash flows from operating activities using the direct method.

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STANDARD CARD COMPANY Statement of Financial Position Dec. 31, 2020 Dec. 31, 2019 Assets Current assets Cash $134,000 $111,000 Accounts receivable 78,000 83,000 Inventory 200,000 110,000 Prepaid insurance 10,000 20,000 Total current assets 427,000 319,000 Non-current assets 305,000 Equipment 350,000 Accumulated depreciation (67,000) (75,000) Total non-current assets 238,000 275,000 Total assets $665,000 $594,000 Liabilitles Current liabilities $ 88,000 $ 83,000 Accounts payable Interest payable 3,000 4,000 Unearned revenue 13,000 18,000 Total current liabilities 104,000 105,000 Long-term debt 100,000 150,000 Total liabilities 204,000 255,000 Shareholders' equity Common shares 200,000 115,000 Retained earnings 224,000 261,000 Total shareholders' equity 461,000 339,000 Total liabilities and shareholders' equity $665,000 $594,000 STANDARD CARD COMPANY Statement of Income For the year ended December 31, 2020 Sales revenue $207,000 Expenses Cost of goods sold $97,000 Depreciation ex pense 12,000 Insurance ex pense 10,000 Interest expense 8,000 Loss on sale of equipment 13,000 Income tax expense 23,000 163,000 Total expenses $ 44,000 Net income