Intermediate Accounting, Vol. 2, 3e (Lo/Fisher) Statement of Cash Flows Brigittes Bathrooms Ltd. balance sheet for the year ended December 31, 2016, follows: 2016 2015 Cash 17,000 43,000 Accounts receivable 104,000 90,000 Inventory 164,000 155,000 Prepaid expenses 48,000 45,000 Land 551,000 310,000 Buildings 860,000 810,000 Accumulated depreciation (250,000) (220,000) Total assets $1,494,000 $1,233,000 Liabilities and shareholders equity Accounts payable 50,000 60,000 Interest payable 2,000 5,000 Notes payable 145,000 132,000 Long-term bank loan 600,000 400,000 Total liabilities 817,000 607,000 Preferred shares 0 100,000 Ordinary shares 285,000 210,000 Retained earnings 392,000 316,000 Total equity 677,000 626,000 Total liabilities and shareholders equity $1,494,000 $1,233,000 Additional information: During the year, Brigitte declared and paid cash dividends of $50,000. They also declared and distributed stock dividends valued at $20,000. Brigitte bought and sold land during the year. The land that was sold for $200,000 originally cost $250,000. A gain of $25,000 was realized on the sale of a building that cost $200,000. Accumulated depreciation at time of sale was $150,000. Brigitte borrowed money from a finance company, which accounted for the increase in notes payable. The companys expenses for the year included $40,000 for income tax and $30,000 for interest. Income tax paid is 30,000. Brigittes policy is to report interest paid in the cash flows from operating activities section, while dividends paid are classified as a cash outflow from financing activities. Required: a. Explain how it is possible to prepare the statement of cash flows without having the income statement. b. Prepare a statement of cash flows for Brigittes Bathrooms Ltd. for 2016 using the indirect method. c. Identify what supplemental disclosure, if any, is required.