2. Prepare a statement of cash flows using the indirect method.(Note: Begin by entering the applicable income statement amounts. Use a minus sign to indicate a negative amount. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.) Score: 34/148 Piura Manufacturing Statement of Cash Flows For the Year Ended June 30, 20X2 1 Cash flows from operating activities: 2 Net income $32,000.00 3 Add (deduct) adjusting items: 4 depreciation 8,000.00 5 Loss on sale of equioment 6,000.00 6 Increase in accounts receivable (4,000.00) 7 8 9 10 11 Cash flows from investing activities: 12 13 Cash flows from financing activities: 14 15 16 17 18 19 Noncash investing and financing activities: 20 Points: 6.89 / 30 Check My Work The indirect method arrives at operating cash flows by making adjustments to net income for noncash items, nonoperating items, and accruals. Depreciation Expense is calculated. Ending Balance Accumulated Depreciation + Accumulated Depreciation of Equipment Sold Beginning Balance Accumulated Depreciation = Depreciation Expense. Investing activities include the purchase and sale of long-term assets. The sale amount is given and the purchase price of new equipment is inferred from the comparative balance sheet information as well as the information about the original cost of the equipment that was sold and removed from the books. The purchase price of the new equipment can be computed: Ending Balance Plant and Equipment + Original Cost of Equipment Sold Beginning Balance = Purchase of Equipment. Financing cash inflows include cash from the issuance of long-term debt or capital stock. Retirement of debt or stock, purchase of treasury stock, and payment of dividends produce cash outflows. Review the "How to Prepare the Statement of Cash Flows" example in the text