Problem 2. Presented below is information related to Reynolds Company. Use it to prepare a statement of cash flows using the indirect method. REYNOLDS COMPANY Comparative Statement of Financial Position Change 1996 $37,000 26,000 Assets Cash Accounts receivable Inventories Prepaid expenses Land Building Accumulated Depreciation - Building Equipment Accumulated Depreciation - Equipment Total 1997 $54,000 68,000 54,000 4,000 45,000 200,000 (21,000) 193,000 (28,000) $569,000 6,000 70,000 200,000 (11,000) 68,000 (10,000) $386,000 Liabilities and Stockholder's Equity Accounts payable Accrued expenses payable Bonds payable Common stock ($1 par) Retained earnings Total $23,000 $40,000 $10,000 $0 $110,000 150,000 220,000 60,000 206,000 136,000 $569,000 $386,000 REYNOLDS COMPANY Statement of Comprehensive Income For the year ended December 31, 1997 $890,000 Revenues Cost of Goods Sold Operating expenses Interest expense Loss on sale of equipment Income from operations Income tax expense Net income $465,000 221,000 12,000 2,000 700,000 190,000 65,000 $125,000 Additional Information (a) Operating expenses include depreciation expense of $33,000 and charges from prepaid expenses of $2,000. (1) Land was sold at its book value for cash. (c) Cash dividends of $55,000 were declared and paid in 1997. (d) Interest expese of $12,000 was paid in cash. (e) Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 abd a book value of $36,000 was sold for $34,000 cash. (f) Bonds of $10,000 were redeemed at their book value for cash; bonds of $30,000 were converted into common stock, (e) Common stock ($1 par) of $130,000 was issued for cash. th) Accounts payable pertain to merchanside suppliers