Clark Company's current year income statement, comparative balance sheets, and additional information follow. For the year. (1) all sales are credit sales. (2) all credits to Accounts Receivable reflect cash receipts from customers. (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. CLARK COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable. Total liabilities $ 74,500 77,000 $86,700 59,000 279,000 255,000 2,600 3,300 433,100 404,000 219,000 (50,000) 150,000 (64,000) $ 682,100 55,100 17,000 72,100 129,000 79,000 59,000 151,100 188,000 Equity Common stock, $5 par value 189,500 170,000 Paid-in capital in excess of par, common stock 58,500 Retained earnings 203,000 132,000 Total liabilities and equity 602,100 490,000 CLARK COMPANY Income Statement For Current Year Ended December 31 Sales $ 768,000 Cost of goods sold 327,000 441,000 Operating expenses Gross profit Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 22,000 174,000 196,000 (6,500) 238,500 42,800 $196,500 General Requirement Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the operating activities section of the statement of cash flows using the indirect method. En reductions to net cash provided by operating activities as negative values. Unadjusted $ 490,000 119,000 10,000 Cash flows from operating activities: CLARK COMPANY Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $6,500 (details in b). b. Sold equipment costing $55,000, with accumulated depreciation of $36,000, for $12,500 cash. c. Purchased equipment costing $124,000 by paying $34,000 cash and signing a long-term note payable for the balance. d. Borrowed $7,000 cash by signing a short-term note payable. e. Paid $70,000 cash to reduce the long-term notes payable. f. Issued 3,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $125,500. Changes in current operating assets and liabilities Dates: December 31 to: De