The income statement, balance sheet, and additional information for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2012 Revenues $ 3,400,000 Gain on sale of land 2,100 Total revenues 3,402,100 Expenses: Cost of goods sold $ 1,620,000 Operating expenses 607,000 Depreciation expense 23,700 Interest expense 24,100 Income tax expense 70,600 Total expenses 2,345,400 Net income $ 1,056,700

VIRTUAL GAMING SYSTEMS Balance Sheet December 31 2012 2011 Assets Current assets: Cash $ 1,091,100 $ 150,000 Accounts receivable 78,000 96,000 Inventory 151,000 137,000 Prepaid rent 4,700 6,600 Long-term assets: Investments 189,000 130,000 Land 211,000 267,000 Equipment 236,000 219,000 Accumulated depreciation (131,700) (108,000) Total assets $ 1,829,100 $ 897,600 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 35,000 $ 92,000 Interest payable 4,400 2,600 Income tax payable 23,000 24,000 Long-term liabilities: Notes payable 245,000 228,000 Stockholders' equity: Common stock 264,000 210,000 Retained earnings 1,257,700 341,000 Total liabilities and stockholders' equity $ 1,829,100 $ 897,600

Additional Information for 2012: 1. Purchase additional investment in stocks for $59,000. 2. Sell land costing $56,000 for $58,100, resulting in a $2,100 gain on sale of land. 3.

Purchase $17,000 in equipment by borrowing $17,000 with a note payable due in three years. No cash is exchanged in the transaction.

4. Declare and pay a cash dividend of $140,000. 5. Issue common stock for $54,000.

Required:

Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the year ended December 31, 2012 Cash Flows from Operating Activities (Click to select) Net income Net loss $ Adjustments for noncash effects: (Click to select) Decrease in inventory Decrease in accounts payable Increase in interest payable Increase in accounts receivable Increase in prepaid rent Loss (on sale of land) Decrease in interest payable Depreciation expense Gain (on sale of land) Purchase investment in bonds (Click to select) Loss (on sale of land) Increase in interest payable Gain (on sale of land) Decrease in inventory Depreciation expense Purchase investment in bonds Decrease in accounts payable Decrease in interest payable Increase in accounts receivable Increase in prepaid rent Changes in current assets and current liabilities: (Click to select) Depreciation expense Purchase investment in stock Decrease in income tax payable Increase in interest payable Decrease in prepaid rent Increase in inventory Decrease in accounts receivable Decrease in accounts payable Gain (on sale of land) Purchase equipment issuing a note payable (Click to select) Purchase equipment issuing a note payable Decrease in accounts receivable Decrease in prepaid rent Increase in interest payable Decrease in income tax payable Increase in inventory Purchase investment in stock Depreciation expense Gain (on sale of land) Decrease in accounts payable (Click to select) Purchase investment in stock Increase in interest payable Gain (on sale of land) Purchase equipment issuing a note payable Decrease in accounts payable Decrease in accounts receivable Increase in inventory Decrease in income tax payable Decrease in prepaid rent Depreciation expense (Click to select) Decrease in prepaid rent Decrease in accounts receivable Increase in interest payable Depreciation expense Increase in inventory Decrease in accounts payable Gain (on sale of land) Decrease in income tax payable Purchase investment in stock Purchase equipment issuing a note payable (Click to select) Decrease in accounts payable Increase in inventory Decrease in prepaid rent Gain (on sale of land) Decrease in accounts receivable Decrease in income tax payable Purchase investment in stock Increase in interest payable Purchase equipment issuing a note payable Depreciation expense (Click to select) Increase in inventory Purchase investment in stock Decrease in income tax payable Decrease in prepaid rent Gain (on sale of land) Increase in interest payable Purchase equipment issuing a note payable Depreciation expense Decrease in accounts receivable Decrease in accounts payable Net cash flows from operating activities $ Cash Flows from Investing Activities (Click to select) Decrease in inventory Increase in income tax payable Sale of land Increase in accounts receivable Decrease in interest payable Purchase investment in stock Increase in prepaid rent Purchase equipment issuing a note payable Depreciation expense Decrease in accounts payable (Click to select) Decrease in accounts payable Decrease in inventory Sale of land Increase in accounts receivable Purchase investment in stock Depreciation expense Decrease in interest payable Increase in income tax payable Increase in prepaid rent Purchase equipment issuing a note payable Net cash flows from investing activities Cash Flows from Financing Activities (Click to select) Payment of cash dividends Decrease in prepaid rent Decrease in accounts receivable Decrease in income tax payable Issue common stock Increase in prepaid rent Increase in accounts receivable Increase in interest payable Increase in accounts payable Decrease in accounts payable (Click to select) Decrease in accounts receivable Decrease in prepaid rent Increase in interest payable Increase in accounts receivable Issue common stock Payment of cash dividends Decrease in income tax payable Decrease in accounts payable Increase in accounts payable Increase in prepaid rent Net cash flows from financing activities (Click to select) Net decrease in cash Net increase in cash (Click to select) Cash at the beginning of the period Cash at the end of the period (Click to select) Cash at the end of the period Cash at the beginning of the period $ Noncash Activities (Click to select) Increase in income tax payable Decrease in inventory Decrease in interest payable Purchase equipment issuing a note payable Purchase investment in stock Increase in accounts receivable Increase in prepaid rent Decrease in accounts payable Sale of land Depreciation expense $