Problem 11-4B Prepare a statement of cash flows-indirect 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 $2,510,000 Gain on sale of land 2,500 Total revenues 2,512,500 Expenses: Cost of goods sold $1,605,000 Operating expenses 606,000 Depreciation expense 24,000 Interest expense 25,000 Income tax expense 71,000 Total expenses 2,331,000 Net income $ 181,500 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 2020 $ 211,140 73,900 146,500 4,060 $ 154,980 89,000 136,000 6,120 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings Total liabilities and stockholders' equity 196,000 210,500 232,000 (129,500) $ 944,600 110,000 261,000 211,000 (105,500) $ 862,600 $ $ 30,500 4,200 21,400 89,000 3,100 24,500 247,000 226,000 361,000 280,500 $ 944,600 310,000 210,000 $ 862,600 Additional Information for 2021: 1. Purchase additional investment in stocks for $86,000. 2. Sell land costing $50,500 for $53,000, resulting in a $2,500 gain on sale of land. 3. Purchase $21,000 in equipment by issuing a $21,000 long-term note payable to the seller. No cash is exchanged in the transaction. 4. Declare and pay a cash dividend of $111,000. 5. Issue common stock for $51,000. VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense Gain (on sale of land) $ 181,500 24,000 (2,500) Decrease in accounts payable $ 203,000 Net cash flows from operating activities Cash Flows from Investing Activities 0 Net cash flows from investing activities Cash Flows from Financing Activities Net cash flows from financing activities 0 Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities $ 0