The financial statements of Resolute Inc. are presented here:

Additional information:
1. Equipment was sold during the year for $8,500 cash. The equipment originally cost $12,000 and had a carrying amount of $8,500 at the time of sale.
2. Equipment costing $14,000 was purchased in exchange for $4,000 cash and a $10,000 long-term bank loan.
3. Accounts payable relate to merchandise creditors.
4. Some of the bank loan was repaid during the year.
5. Operating expenses are composed of $9,500 of depreciation expense, $7,750 of administrative expenses, $50,000 of salaries expense, and an $11,000 impairment loss on goodwill.
Instructions
(a) Prepare the statement of cash flows, using the indirect method , as assigned by your instructor.
(b) Resolute's cash position more than doubled between 2011 and 2012. Identify the primary reason(s) for this significant increase.

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RESOLUTE INC. Statement of Financial Position December 31 2012 2011 Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Goodwill Total assets $13,000 38,000 27,000 80,000 (30,000) 5,000 5,000 24,000 20,000 78,000 (24,000) 16,000 $133,000 $119,000 Liabilities and Shareholders' Equit Accounts payable Salaries payable Income tax payable Bank loan payable Common shares Retained earnings Accumulated other comprehensive income Total liabilities and shareholders' equity $17,000 1,900 1,000 34,100 18,000 56,000 5,000 $133,000 15,000 2,100 4,000 50,650 14,000 28,250 5,000 $119,000 RESOLUTE INC. Income Statement Year Ended December 31, 2012 $256,000 140,000 116,000 78,250 37,750 4,000 33,750 6,000 $ 27,750 Cost of goods sold Operating expenses Profit from operations Interest expense Profit before income tax Income tax expense Profit 4