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 Accounts receivable Inventory Equipment Accumulated depreciation-equipment Land Total assets Liabilities and equity Accounts payable (inventory) Long-term debt Common stock Retained earnings Total liabilities and equity $ 32,500 4,750 11,200 45,000 (17,800) 28,000 $103,650 $ 16,300 2,800 9,800 52,000 (21,800) 12,000 $ 71,100 3,750 5,800 47,000 47,100 $ 103,650 $ 4,900 7,800 25,000 33,400 $ 71,100 Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 61,200 Cost of goods sold (24,500) Gross margin 36,700 Depreciation expense (12,000) Operating income 24,700 Gain on sale of equipment 1,500 Loss on disposal of land (100) Net income $ 26,100 Additional Data 1. During Year 2, the company sold equipment for $21,500; it had originally cost $36,000. Accumulated depreciation on this equipment was $16,000 at the time of the sale. Also, the company purchased equipment for $29,000 cash. 2. The company sold land that had cost $6,000. This land was sold for $5,900, resulting in the recognition of a $100 loss. Also, common stock was issued in exchange for title to land that was valued at $22000 at the time of exchange 2. The company sold land that had cost $6,000. This land was sold for $5,900, resulting in the recognition of a $100 loss. Also, common stock was issued in exchange for title to land that was valued at $22,000 at the time of exchange. 3. Paid dividends of $12,400. Required Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with minus sign.) GYPSY COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Net income $ 26,100 Less: Increases in current assets and Decreases in current liabilities: Increase in accounts receivable Increase in inventory Decrease in accounts payable Plus: Noncash charges Proceeds from sale of land 100 $ 26,200 (29,000) Cash flows from investing activities: Paid to purchase equipment Proceeds from sale of equipment Proceeds from sale of land (29,000) Cash flows from financing activities: Paid for dividends Repayment of debt 0 Plus: Noncash charges Proceeds from sale of land 100 $ 26,200 (29,000) Cash flows from investing activities: Paid to purchase equipment Proceeds from sale of equipment Proceeds from sale of land (29,000) Cash flows from financing activities: Paid for dividends Repayment of debt 0 (2,800) Net increase in cash Plus: Beginning cash balance Ending cash balance Schedule of noncash investing and financing activities: Issued common stock for land $ (2,800)