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 Assets: Cash $85,600 $65,200 Accounts receivable, net 72,850 56,750 Merchandise inventory 157,750 144,850 Prepaid expenses 6,080 12.680 Equipment 280.600 245,600 Accumulated depreciation Equipment (80.600) (97.600) Total assets $522.280 $427 480 Liabilities: Accounts payable $52,850 $45,450 Income taxes payable 15, 240 12.240 Notes payable (long term) 59.200 79.200 Total liabilities $127 290 $136.890 Equity: Common stock 200.000 150.000 Paid-in capital in excess of par 53.000 40.000 Retained earnings 141.990 100.590 Total equity $394.990 $290.590 Total liabilities and equity S522.280 $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 f. All purchases and sales of merchandise inventory are on credit