Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New machinery is acquired for $65,600 cash. d. Received cash for the sale of machinery that had cost $56,600, yielding a $2,800 gain. e. Prepaid Expenses and Salaries Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. Required: (1) Prepare a statement of cash flows using the indirect method for the year ended December 31, Year 2 . Note: Amounts deducted should be indicated with a minus sign. \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|l|}{ Comparative Balance Sheets } \\ \hline At December 31 & Year 2 & Year 1 \\ \hline \multicolumn{3}{|l|}{ Assets } \\ \hline Cash & $102,700 & $52,000 \\ \hline Accounts receivable, net & 77,000 & 59,000 \\ \hline Inventory & 71,800 & 98,500 \\ \hline Prepaid expenses & 5,200 & 7,000 \\ \hline Total current assets & 256,700 & 216,500 \\ \hline Machinery & 132,000 & 123,000 \\ \hline Accumulated depreciation-Machinery & (31,000) & (13,000) \\ \hline Total assets & $357,700 & $326,500 \\ \hline \multicolumn{3}{|l|}{ Liabilities } \\ \hline Accounts payable & $33,000 & $42,000 \\ \hline Salaries payable & 6,800 & 16,600 \\ \hline Income taxes payable & 4,200 & 5,400 \\ \hline Total current liabilities & 44,000 & 64,000 \\ \hline Notes payable (long term) & 38,000 & 68,000 \\ \hline Total liabilities & 82,000 & 132,000 \\ \hline \multicolumn{3}{|l|}{ Equity } \\ \hline Common stock, no par value & 236,000 & 168,000 \\ \hline Retained earnings & 39,700 & 26,500 \\ \hline Total liabilities and equity & $357,700 & $326,500 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{3}{|c|}{ Statement of Cash Flows (Indirect Method) } \\ \hline Cash flows from operating activities & & \\ \hline & & \\ \hline Adjustments to reconcile net income to net cash provided by operating activities \\ \hline Income statement items not affecting cash & & \\ \hline & & \\ \hline & & \\ \hline Changes in current assets and current liabilities & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular}