5. Statement of cash flows - Indirect method The income statement and comparative balance sheets for Chan Inc. are shown below. The statement of retained earnings (not shownes in Chan paid $126,000 in cash dividends during the year. The company uses the indirect method for preparing the statement of Use the information provided in these financial statements to construct Chan's statement of cash flows. Complete the statement bering the appropriate value. Note: Be sure to enter a negative sign for those values that represent a cash outflow. It is not necessary to enter a positive sign for a cash representing an inflow. Chan Inc. Income Statement For the Year Ending December 31, Year 2 \begin{tabular}{lcc} Sales & $2,100,000 \\ Cost of goods sold & 1,270,500 \\ Gross profit & $829,500 \\ Operating expenses: & & \\ Depreciation expense & $37,044 & \\ Other operating expenses & 298,956 & \\ Total operating expenses & & 336,000 \\ Operating profit (EBIT) & & $493,500 \\ Interest expense & 178,500 & $315,000 \\ Earnings before taxes & & $210,000 \\ Taxes & 105,000 & \\ \hline Net income & & \\ \hline \end{tabular} Chan Inc. Balance Sheet As of December 31, Year 2 \begin{tabular}{ccc} Year 2 & Year 1 & Increase \\ & & \\ & & Decrease \\ & & \\ \hline$56,640 & $24,600 & $32,040 \\ 78,000 & 67,200 & 10,800 \\ \hline 201,360 & 178,200 & 23,160 \\ 413,484 & 370,440 & 43,044 \\ 77,484 & 40,440 & 37,044 \\ $672,000 & $600,000 & $72,000 \end{tabular} Assets Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Net income Adjustments: Depreciation Changes in current operating assets and liabilities: Cash flows from financing activities: Net cash flow from financing activities Change in cash Cash at the beginning of the year 24,600 Cash at the end of the year