Problem 11-7B Calculate operating activities-direct method (LO11-4, 11-5, 11-7) The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. $2,600,000 7,000 2,607,000 VIRTUAL GAMING SYSTEMS Income Statement For the Year Ended December 31, 2021 Net sales Gain on sale of land Total revenues Expenses : Cost of goods sold $1,650,000 Operating expenses 615,000 Depreciation expense 33,000 Interest expense 34,000 Income tax expense 80,000 Total expenses Net income 2,412,000 $ 195,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 2020 $ 409,500 64,000 160,000 4,600 343,800 80,000 145,000 7,200 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 205,000 215,000 250,000 (143,000) $1,165,100 110,000 270,000 220,000 (110,000) $1,066,000 $ $ 35,000 5,100 25,000 98,000 4,000 29,000 265,000 235,000 460,000 375,000 $1,165,100 400,000 300,000 $1,066,000 Additional Information for 2021: 1. Purchase additional investment in stocks for $95,000 2. Sell land costing $55,000 for $62,000, resulting in a $7,000 gain 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 for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)