Exercise 13-4 Selected information from Sheridan Ltd.'s statement of financial position and income statement is as follows: SHERIDAN LTD. Statement of Financial Position (partial) December 31 2018 2017 Current assets Accounts receivable $7,400 $12,600 Inventory 6,200 5,000 Prepaid expenses 4,000 2,000 Current liabilities Accounts payable 3,650 2,300 Income tax payable 1,300 700 Accrued liabilities 2,400 1,300 Bank loan payable-current portion 5,700 9,200 SHERIDAN LTD. Income Statement Year Ended December 31, 2018 Net sales $190,000 Cost of goods sold 115,000 Gross profit 75,000 Operating expenses 57,000 Income from operations 18,000 Interest expense 1,900 Income before income tax 16,100 Income tax expense 3,800 Net income $12,30 Additional information: 1. 2. The bank loan was issued to finance the purchase of equipment. Operating expenses included depreciation expense of $11,200 and a loss of $5,000 on the disposal of equipment Prepare the operating activities section of the statement of cash flows, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) SHERIDAN LTD. Statement of Cash Flows (Partial)-Indirect Method Year Ended December 31, 2018 Operating activities Net Income 12300 Adjustments to reconcile net income to Net cash provided (used) by operating activities Increase in prepaid expenses + Loss on disposal of equipment Decrease in accounts receivable Increase in accounts payable Depreciation expense Increase in income tax payable Increase in accounts payable Increase in accrued liabilities Net cash provided by operating activities