3. Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 2021 using the indirect method. Target Company Balance Sheets At December 31, 2021 2021 2020 $85,600 72.850 157,750 6,080 280,600 180.600) $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 earings Total equity Total liabilities and equity $52,850 15,240 59.200 $127.290 $45,450 12,240 79,200 $136,890 200.000 53,000 141.990 $394.990 $522.280 150.000 40.000 100590 $290.590 $427 480 Target Company Income Statement For Year Ended December 31, 2021 $488.000 $212,540 43,000 106,260 6.400 (368.200) 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 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 earnings 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 again of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement 1. All purchases and sales of merchandise inventory are on credit