Problem 11-4B Prepare a statement of cash flows-indirect method (LO11-2, 11-3) 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, 2018 Net sales $ 2,600,000 Gain on sale of land 7,000 2,607,000 Total revenues Expenses Cost of goods sold Operating expenses Depreciation expense Interest expense Income tax expense $ 1,650,000 615.000 33.000 34.000 80,000 Total expenses 2,412,000 Net income $ 195,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2018 2017 Assets Current assets Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation 409,500 $ 64,000 160,000 4,600 343,800 80,000 145,000 7,200 205,000 215,000 250,000 (143,000) 110,000 270,000 220,000 (110,000) Total assets $ 1,165,100 $ 1,066,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable Interest payable Income tax payable Long-term liabilities Notes payable Stockholders uit 35.000 $ 5. 100 25 000 98.000 4,000 29.000 265.000 235.000 Total assets $ 1,165,100 $ 1.066.000 Liabilities and Stockholders' Equity Current abilities Accounts payable Interest payable Income tax payable Long-term liabilities Notes payable Stockholders' equity Common stock Retained earnings 35,000 $ 5,100 25,000 98.000 4.000 29 000 265,000 235.000 460,000 375,000 400 000 300.000 Total abilities and stockholders' equity $ 1,165,100 $ 1066,000 Additional Information for 2018 1. Purchase additional investment in stocks for $95.000 2. Sell land costing $55,000 for $62.000, resulting in a $7.000 gan on sale of land 3. Purchase $30,000 in equipment by issuing a $30 000 long term note payable to the seller No cash is exchanged in the transaction 4. Declare and pay a cash dividend of $120.000 5 Issue common stock for $60,000 Required: Prepare the statement of cash flows using the indiveer method Disclose any noncash transaction in an accompanying note (List cash outflows and any decrease in cash as negative amounts VIRTUAL GAMING SYSTEMS VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flows from Operating Activities Net income 275,000 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense 33,000 Increase in interest payable 34,000 Gain (on sale of land) (7,000) 60,000 Decrease in accounts receivable 16,000 (15,000) (63.000) 2,600 Increase in inventory Decrease in accounts payable Decrease in prepaid rent Decrease in income tax payable Net cash flows from operating activities Cash Flows from investing Activities $ 335,600 Net cash flows from investing activities Cash Flows from Financing Activities Decrease in income tax payable Net cash flows from operating activities Cash Flows from Investing Activities 335,600 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