The statement of income and unclassified statement of financial position for Sheridan, Inc. follow: 2020 $47,000 112,000 41,200 92,350 2,300 SHERIDAN, INC. Statement of Financial Position December 31 Assets 2021 Cash $98,400 Trading investments 129,000 Accounts receivable 75,500 Inventory 120,500 Estimated inventory returns 2,900 Prepaid expenses 18,600 Equipment 277,000 Accumulated depreciation (40,000) Total assets $681,900 Liabilities and Shareholders' Equity Accounts payable $96,500 Property tax payable 10,200 Refund liability 1,200 Bank loan payable-current portion 48,000 Bank loan payable-noncurrent portion 70,000 Common shares 210,000 Retained earnings 246,000 Total liabilities and shareholders' equity $681,900 27,000 253,500 (53,800) $521,550 $71,000 6,400 900 115,250 30,000 190,000 108,000 $521,550 SHERIDAN, INC. Statement of Income Year Ended December 31, 2021 Sales $503,550 188,400 315,150 116,420 198,730 Cost of goods sold Gross profit Operating expenses Income from operations Other income and expenses Unrealized gain on trading investments Interest expense Income before income tax $17,000 (4,710) 12,290 Income tax expense 211,020 48,000 $163,020 Net income Additional information regarding 2021: 1. 2. 3. 4. 5. Prepaid expenses and property tax payable relate to operating expenses. New equipment costing $86,000 was purchased for $20,600 cash and a $65,400 long-term bank loan payable. Old equipment having an original cost of $62,500 was sold for $1,100. Accounts payable relate to inventory suppliers. Some of the bank loan was repaid during the year. A dividend was paid during the year. Operating expenses include $46,100 of depreciation expense and a $1,500 loss on disposal of equipment. Common shares were issued for $42,000 cash during the year and some common shares were bought back and retired at the cost they were originally issued at. 6. 7. 8. (a) Prepare the statement of cash flows, using the indirect method. (Show amounts that decrease cash flow with either a-sign eg. -15,000 or in parenthesis eg. (15,000).) SHERIDAN, INC. Statement of Cash Flows Adjustments to reconcile net income to $ $ by Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ paying $20,600 cash and issuing a $65,400 bank loan payable