Problem - 25 points - Prepare a statement of cash flows using the indirect method and prepare the operating section under the direct method. Comparative balance sheet accounts of Phillips Company are presented below: Debit Balances Cash Investments Equity Accounts receivable Inventory Land Buildings Equipment Totals 2020 $60,000 30,000 152,000 118,000 50,000 160,000 60,000 $630,000 2019 $71,500 55,000 136,000 84,000 15,000 160,000 41.500 $563,000 Credit Balances Allowance for doubtful accounts Accumulated depreciation - buildings Accumulated depreciation - equipment Accounts payable Income taxes payable Long-term notes payable Common Stock Retained earnings Totals $6,000 40,000 24,000 102,000 13,000 65,000 295,000 85,000 $630,000 $3,000 32,000 18,500 95,000 8,000 80,000 236,500 90,000 $563,000 Additional data: 1. Equipment that cost $20,000 and was 40% depreciated was sold in 2020 2. Cash dividends were declared and paid during the year 3. Common stock was issued in exchange for land. 4. Investments that cost $25,000 were sold during the year. 5 There were no write-offs of uncollectible accounts during the year. Phillips' 2020 income statement is as follows: Sales Cost of goods sold Gross Profit Less Operating Expenses expense) Income from Operations Other revenues and expenses Gain on sale of investments $7,000 Loss on sale of equipment 14,000) Income before taxes Income taxes Net Income $750,000 480,000 270,000 145,000 (includes depreciation expense and bad debt 125,000 3,000 128,000 52.000 $ 76,000