The statement of income and unclassified statement of financial position for Sheridan, Inc. follow: SHERIDAN, INC. Statement of Financial Position December 31 Assets 2021 $97,800 127,000 77,000 121,400 2,400 Cash Trading investments Accounts receivable Inventory Estimated inventory returns Prepaid expenses Equipment Accumulated depreciation Total assets Liabilities and Shareholders' Equity Accounts payable 2020 $47,000 116,000 42,600 91,550 1,600 26,600 267,000 (52,300) $540,050 18,700 292,000 (46,000) $690,300 $99,000 $72,500 9,900 6,700 800 1,100 40,000 Property tax payable Refund liability Bank loan payable-current portion Bank loan payable-noncurrent portion Common shares Retained earnings Total liabilities and shareholders' equity 134,750 27,300 87,300 210,000 185,000 113,000 243,000 $690,300 $540,050 $527,200 SHERIDAN, INC. Statement of Income Year Ended December 31, 2021 Sales Cost of goods sold Gross profit Operating expenses Income from operations 186,900 340,300 116,460 223,840 Other income and expenses Unrealized gain on trading investments Interest expense $11,000 (4,700 ) Income before income tax 6,300 230,140 47,000 $183,140 Income tax expense Net income Additional information regarding 2021: 1. 2. 3. 4. 5. Prepaid expenses and property tax payable relate to operating expenses. New equipment costing $90,000 was purchased for $24,400 cash and a $65,600 long-term bank loan payable. Old equipment having an original cost of $65,000 was sold for $1,000. 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 $46,500 of depreciation expense and a $11,200 loss on disposal of equipment. Common shares were issued for $43,000 cash during the year and some common shares were bought back and retired at the cost they were originally issued at. 6. 7. 8. Prepare the statement of cash flows, using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis e.g. (15,000).) SHERIDAN, INC. Statement of Cash Flows December 31, 2021 Cash flows from operating activities Net income $ 183,140 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense $ 46,500 Loss on disposal of equipment 11,200 Unrealized gain on trading investments -11,000 Increase in estimated inventory returns -800 Increase in accounts receivable -34400 Increase in inventory -29850 Decrease in prepaid expenses 7900 Increase in accounts payable 26500 Increase in property taxes payable 3200 Increase in refund liability 300 19550 Net cash used by operating activities 202690 Cash flows from investing activities Purchase of equipment $ -24,400 Proceeds from disposal of equipment 1000 Net cash used by investing activities -23400 Cash flows from financing activities Repayment of bank loan payable $ -100350 Repurchase of common shares > 43,000 Sale of common shares -22,000 > Payment of cash dividends -53140 Net cash used by financing activities -132490 Net increase in cash 46800 Cash, January 1 Cash, December 31 $ Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $24,400 cash and issuing a $65,600 bank loan payable