Galley Corp., a merchandiser, recently completed its 2011 operations. 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, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company%u2019s balance sheets and income statement follow. GALLEY CORPORATION Comparative Balance Sheets December 31, 2011 and 2010 2011 2010 Assets Cash $ 213,968 $ 136,584 Accounts receivable 101,308 94,308 Merchandise inventory 706,584 624,384 Equipment 434,964 347,964 Accum. depreciation%u2014Equipment (175,340) (119,240) Total assets $ 1,281,484 $ 1,084,000 Liabilities and Equity Accounts payable $ 135,944 $ 71,544 Income taxes payable 31,284 28,184 Common stock, $2 par value 627,200 597,200 Paid-in capital in excess of par value, common stock 242,200 189,700 Retained earnings 244,856 197,372 Total liabilities and equity $ 1,281,484 $ 1,084,000 GALLEY CORPORATION Income Statement For Year Ended December 31, 2011 Sales $ 1,866,600 Cost of goods sold 1,157,292 Gross profit 709,308 Operating expenses Depreciation expense $ 56,100 Other expenses 484,905 541,005 Income before taxes 168,303 Income taxes expense 32,819 Net income $ 135,484 Additional Information on Year 2011 Transactions a. Purchased equipment for $87,000 cash. b. Issued 15,000 shares of common stock for $5.50 cash per share. c. Declared and paid $88,000 in cash dividends. Required: Prepare a complete statement of cash flows using a spreadsheet; report operating activities under the indirect method. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) a. Net income was $135,484. b. Accounts receivable increased. c. Merchandise inventory increased. d. Accounts payable decreased. e. Income taxes payable increased. f. Depreciation expense was $56,100. g. Purchased equipment for $87,000 cash. h. Issued 15,000 shares at $5.50 cash per share. i. Declared and paid $88,000 of cash dividends. GALLEY CORPORATION Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2011 December 31, 2010 Analysis of Changes December 31, 2011 Debit Credit Balance sheet%u2014debit bal. accounts Cash $ $ $ $ Accounts receivable Merchandise inventory Equipment $ $ Balance sheet%u2014credit bal. accounts Accum. depreciation%u2014Equip $ $ Accounts payable Income taxes payable Common stock, $2 par value Paid-in excess of par value, common stock Retained earnings $ $ Statement of cash flows Operating activities Net income Increase in accounts receivable Increase in merch. inventory Decrease in accounts payable Increase in income tax payable Depreciation expense Investing activities Payment for equipment Financing activities Issued common stock for cash Paid cash dividends $ $