Problem 11-4B Prepare a statement of cash flowsindirect method (LO11-2, 11-3, 11-4, 11-5)

The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2021
Net sales					$	2,550,000
Gain on sale of land						4,500
Total revenues						2,554,500
Expenses:
Cost of goods sold	$	1,625,000
Operating expenses		610,000
Depreciation expense		28,000
Interest expense		29,000
Income tax expense		75,000
Total expenses						2,367,000
Net income					$	187,500

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2021				2020
Assets
Current assets:
Cash	$	289,400			$	228,900
Accounts receivable		69,500				85,000
Inventory		152,500				140,000
Prepaid rent		4,300				6,600
Long-term assets:
Investments		210,000				120,000
Land		212,500				265,000
Equipment		240,000				215,000
Accumulated depreciation		(135,500	)			(107,500	)
Total assets	$	1,042,700			$	953,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	32,500			$	93,000
Interest payable		4,700				3,500
Income tax payable		23,000				26,500
Long-term liabilities:
Notes payable		255,000				230,000
Stockholders' equity:
Common stock		405,000				350,000
Retained earnings		322,500				250,000
Total liabilities and stockholders equity	$	1,042,700			$	953,000

Additional Information for 2021:

Purchase additional investment in stocks for $90,000.

Sell land costing $52,500 for $57,000, resulting in a $4,500 gain on sale of land.

Purchase $25,000 in equipment by issuing a $25,000 long-term note payable to the seller. No cash is exchanged in the transaction.

Declare and pay a cash dividend of $115,000.

Issue common stock for $55,000.

Required:

Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)

VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities