1. Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 2017 using the indirect method. Derby Company Balance Sheets At December 31 2015 2014 $85,600 72,850 157.750 6,080 280,600 (80,600) $522,280 $65,200 56,750 144,850 12,680 245,600 (97,600) $427,480 + Assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Equipment Accumulated depreciation-Equipment Total assets Liabilities: Accounts payable Income taxes payable Notes payable (long term) Total liabilities Equity: Common stock Paid-in capital in excess of par Retained earnings Total equity Total liabilities and equity $52,850 $45,450 15,240 12,240 59,200 79.200 $127,290 $136.890 200,000 53,000 141.990 $394.990 $522,280 150,000 40,000 100.590 $290,590 $427.480 + Statement of Cash Flows Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: Derby Company Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Depreciation expense Other operating expenses Interest expense Other gains (losses): Gain on sale of equipment Income before taxes Income taxes expense Net income S488,000 $212,540 43,000 106,260 6,400 (368,200) 4,700 124,500 41.100 $83,400 Additional Information a. A $20,000 note payable is retired at its carrying value in exchange for cash. b. The only changes affecting retained earings are net income and cash dividends paid. c. New equipment is acquired for $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement f. All purchases and sales of merchandise inventory are on credit. Net cash provided by operations Cash flows from investing activities: + Net cash used by investing activities Cash flows from financing activities: Net cash used by financing activities Net increase in cash Cash balance at beginning ofyear Cash balance at end of year +