Problem 12-18A Using financial statements to prepare a statement of cash flows-Indirect method LO 12- 1, 12-3, 12-4 The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $23,231 $ 2,650 Accounts receivable 1,900 1,140 Inventory 6,223 5,834 Equipment 17,110 40,850 Accumulated depreciation (6,577) (15,525) -equipment Land 17,770 11,630 Total assets $59,657 $ 46,579 Liabilities and equity Accounts payable $ 2,700 $ 4,362 (inventory) Long-term debt Common stock 2,974 6,798 21,600 10,500 Retained earnings 32,383 24,919 Total liabilities and equity $59,657 $ 46,579 Income Statement For the Year Ended December 31, Year Sales revenue 2 Cost of goods sold Gross margin Depreciation expense Operating income Gain on sale of equipment Loss on disposal of land Net income $ 30,240 (11,986) 18,254 (3,915) 14,339 650 (60) $ 14,929 Additional Data 1. During Year 2, the company sold equipment for $18,787; it had originally cost $31,000. Accumulated depreciation on this equipment was $12,863 at the time of the sale. Also, the company purchased equipment for $7,260 cash. 2. The company sold land that had cost $4,960. This land was sold for $4,900, resulting in the recognition of a $60 loss. Also, common stock was issued in exchange for title to land that was valued at $11,100 at the time of exchange. 3. Paid dividends of $7,465.