(Chapter Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) XS Supply Company is developing its annual financial statements at December 31, current year. The state- ments are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Current Year Prior Year Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation $ 34,000 35,000 41,000 121,000 (30,000) $201,000 $ 29,000 28,000 38,000 100,000 (25,000) $170,000 Current Year Prior Year Accounts payable Wages payable Note payable, long-term Common stock and additional paid-in capital Retained earnings $ 36,000 1,200 38,000 88,600 37,200 $201,000 $ 27.000 1,400 44,000 72,600 25,000 $170,000 Income statement for current year Sales Gain on sale of equipment Cost of goods sold Other expenses Net income $120,000 1,000 70,000 38,800 $ 12,200 Additional Data: a. Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depre- ciation of $7,000, for $4,000 cash. b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800. f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash. Required: 1. Prepare the statement of cash flows for the year ended December 31, current year, using the indirect method. 2. Evaluate the statement of cash flows. (100 POINTS)