Financial Information for Fesone Inc Additional Information:
1

Financial information for Fesone Inc.'s balance sheet for fiscal 2013 and 2014 follows:
$\begin{array}{lll}&2014&2013\\\text { Cash } & 32,300 & 350,000 \\\text { Accounts receivable } & 1,670,000 & 1,800,000 \\\text { Inventory } & 710,000 & 450,000 \\\text { Investments - held for trading } & 350,000 & 0 \\\text { Investments - held to maturity } & 150,000 & 0 \\\text { Property plant and equipment } & 4,000,000 & 4,000,000 \\\text { Accumulated depreciation } & (1,935,000) & (1,660,000) \\\text { Total } & \mathbf{4 , 9 7 7 , 3 0 0} & \mathbf{4 , 9 4 0 , 0 0 0}\end{array}$
$\begin{array}{lll}\text { Accounts payable } & 220,000 & 40,000 \\\text { Bank loan } & 2,601,000 & 3,000,000 \\\text { Bonds payable } & 595,300 & 590,000 \\\text { Preferred shares } & 0 & 20,000 \\\text { Common shares } & 473,000 & 350,000 \\\text { Retained earnings } & 1,088,000 & 940,000 \\\text { Total } & \mathbf{4 , 9 7 7 , 3 0 0} & \mathbf{4 , 9 4 0 , 0 0 0}\end{array}$
Additional information:
1. Preferred shares were converted to common shares during the year at their book value.
2. The face value of the bonds is $600,000; they pay a coupon rate of 6% per annum. The effective interest rate of interest is 7% per annum.
3. Net income was $205,000.
4. There was an ordinary stock dividend valued at $13,000 and cash dividends were also paid.
5. Interest expense for the year was $115,000. Income tax expense was $61,500.
6. Fesone arranged for a $425,000 bank loan to finance the purchase of the held-to-maturity investments.
7. Fesone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities,respectively.
8. The held-for-trading investments are not cash equivalents.
9. Sales = 2,000,000; cost of goods sold = 300,000; and,sales and administration expenses = 1,043,500
Requirement:
Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.