II. Statement of Cash Flows (25 points) The following is Grafton Corporation's comparative balance sheets for 2018 and 2017: $ $ Cash Accounts receivable Inventories Property, plant, and equipment Accumulated depreciation Investment in Elkins Corporation Loan receivable Total assets December 31, 2018 400,000 564,000 925,000 1,653,500 (582,500) 152,500 135.000 $ 3.247.500 2017 350,000 584,000 857,500 1,483,500 (520,000) 137,500 $ 2.892,500 $ $ 477,500 25,000 45,000 Accounts payable Income taxes payable Dividends payable Capital lease obligation Capital stock, common, $1 par Additional paid-in capital Retained earnings Total liabilities and stockholders' equity 507,500 15,000 40,000 200.000 250,000 750,000 1,485,000 250,000 750,000 1,345,000 $ 3,247.500 $ 2,892.500 Additional information: On December 31, 2017, Grafton acquired 25 percent of Elkins Corporation's common stock for $137,500. On that date, the carrying value of Elkins' not assets and liabilities (which approximated fair value) was $550,000. Elkins reported income of $60,000 for the year ended December 31, 2018. No dividend was paid on Elkins' common stock during the year. 2. During 2018, Grafton loaned $150,000 to Beckley Company, an unrelated entity. Beckley made the first semi-annual principal payment of $15,000, plus interest at 10 percent, on October 1, 2018 3. On January 2, 2018, Grafton sold equipment costing $30,000, with a carrying value of $17,500, for $20,000 cash. 4. On January 2, 2018, Grafton entered into a capital lease for an office building. The present value of the annual rental payments is $200,000, which equals the fair value of the building. Grafton made the first lease payment of $30,000 when due on January 2 2019 5. Grafton's net income for 2014 was $180,000 6. Grafton declared and paid cash dividends for 2018 and 2017 as follows: Declared Paid Amount 2018 Dec. 15, 2018 Feb. 28, 2019 $ 40,000 2017 Dec. 15, 2017 Feb. 28, 2018 $ 45,000 Required: 2018 Prepare a statement of cash flows for Grafton Company for at using the indirect method. Include relevant supplemental schedules. ANS