The 2021 and 2020 balance sheets of Watson Corporation follow. The 2021 income statement is also provided. Watson had no noncash investing and financing transactions during 2021. During the year, the company sold equipment for $15,300, which had originally cost $13.300 and had a book value of $11,000. The company did not issue any notes payable during the year but did issue common stock for $34,000. The company purchased plant assets and long term investments with cash. (Click the icon to view the income statement.) (Click the icon to view the balance sheets.) Requirements 1. Prepare the statement of cash flows for Watson Corporation for 2021 using the Indirect method. 2. Evaluate the company's cash flows for the year. Discuss each of the categories of cash flows in your response. VII DIVI SLUCH Decrease in accounts recolvablo (2,600) 7.800 Decrease in inventory Increase in prepaid insurance Decrease in accounts payable Decrease in wages payable Decrease in interest payable Increase in taxes payable (200) (3.600) (4,200) 2,200 5.300 Decrease in other accrued expenses payable (3.600) 2.800 180,100 Net cash provided by used for) operating activities Investing Activities: Proceeds on sale of equipment Purchase of equipment 15300) Purchase of stock investments Net cash provided by (used for) Investing activities Income statement A B 1 Watson Corporation 2 Income Statement 3 For the Year Ended December 31, 2021 4 Sales revenues $ 342,000 5 Less: Cost of goods sold 77,000 6 Gross profit $ 265,000 7 Less operating expenses: 8 00 Salaries and wages expense $ 27,500 9 Depreciation expense 6,000 10 Other operating expenses 13,500 11 Total operating expenses $ 47,000 $ 218,000 12 Operating income Plus other income and less other 13 expenses: 14 Interest expense $ 9,600 15 Gain on sale of PP&E 4,300 16 Total other income and expenses 5,300 zon Income statement 2 IIICUTTIC JALCITICITL 3 For the Year Ended December 31, 2021 4 Sales revenues $ 342,000 5 Less: Cost of goods sold 77,000 $ 265,000 6 Gross profit 7 Less operating expenses: 8 Salaries and wages expense $ 27,500 9 6,000 Depreciation expense Other operating expenses 10 13,500 $ 47,000 11 Total operating expenses 12 Operating income Plus other income and less other 13 expenses: $ 218,000 14 Interest expense $ 9,600 15 Gain on sale of PP&E 4,300 16 Total other income and expenses 5,300 17 Income before income taxes $ 212,700 18 Less: Income tax expense 35,400 19 Net income $ 177,300 - Balance sheets A B 1 2 Watson Corporation Comparative Balance Sheets December 31, 2021 and 2020 3 4 Assets 2021 2020 5 Current assets: 6 Cash $ 52,000 $ 22,500 7 Accounts receivable 32,100 29,500 8 Inventory 86,800 94,600 9 Prepaid insurance 3,100 2,900 10 Total current assets $ 174,000 $ 149,500 11 150,000 136,000 12 Property, plant, and equipment 13 Less: Accumulated depreciation (30,800) (27,100) 14 Investments 114,000 0 15 Total assets $ 407,200 $ 258,400 16 17 Liabilities X Balance sheets 17 Liabilities 18 Current liabilities: 19 Accounts payable $ 33,100 $ 36,700 3,000 7,200 2,200 0 20 Wages payable 21 Interest payable 22 Income taxes payable 23 Other accrued expenses payable 5,300 0 18,800 22,400 24 Total current liablities $ 62,400 $ 66,300 25 26 Long-term liabilities 73,000 113,000 27 Total liabilities $ 135,400 $ 179,300 28 29 Stockholders' equity 30 Common stock 105,000 71,000 31 Retained earnings 166,800 8,100 32 Total stockholders' equity $ 271,800 $ 79,100 33 34 Total liabilities and equity $ 407,200 $ 258,400