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. $2,560,000 5,000 2,565,000 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 $1,630,000 Operating expenses 611,000 Depreciation expense 29,000 Interest expense 30,000 Income tax expense 76,000 Total expenses Net income 2,376,000 $ 189,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 2020 331, 240 68,400 154,000 4,360 $ 269,880 84,000 141, 6,720 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 191,000 213,000 242,000 (137,000) $1,067,000 100,000 266,000 216,000 (108,000) $ 975,600 33, 4,600 23,400 $ 94,000 3,600 27,000 257,000 231,000 416,000 333,000 $1,067,000 360,000 260,000 $ 975,600 Additional Information for 2021: 1. Purchase additional investment in stocks for $91,000 2 Sell land costing $53,000 for $58.000, resulting in a $5,000 gain on sale of land. 3. Purchase $26.000 in equipment by issuing a $26,000 long-term note payable to the seller. No cash is exchanged in the transaction 4 Declare and pay a cash dividend of $116,000. 5. Issue common stock for $56,000 Required: Prepare the statement of cash flows for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note. (list cosh outflows and any decrease in cash os negative amounts.) VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities: Net cash flows from operating activities Cash Flows from Investing Activities: Net cash flows from investing activities Cash Flows from Financing Activities Net cash flows from operating activities Cash Flows from Investing Activities: Net cash flows from investing activities Cash Flows from Financing Activities: Net cash flows from financing activities Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities