Use the following financial statements and additional information. BARCELONA INCORPORATED Comparative Balance Sheets Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value June 30, 2019 and 2018 2019 2018 $ 86,300 78,000 66,000 $ 41,700 61,000 92,000 5,000 6,300 235,300 201,000 153,000 (39,000) $ 349,300 $ 30,000 8,000 142,000 (13,000) $ 330,000 $ 36,000 19,000 3,600 4,000 41,600 59,000 38,000 75,000 79,600 134,000 220,000 160,000 Retained earnings 49,700 36,000 Total liabilities and equity $ 349,300 $ 330,000 Sales BARCELONA INCORPORATED Income Statement For Year Ended June 30, 2019 Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income Additional Information $ 68,000 $ 803,000 491,000 312,000 77,000 $145,000 167,000 3,300 170,300 52,130 $ 118,170 a. A $37,000 note payable is retired at its $37,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $67,000 cash. d. Received cash for the sale of equipment that had cost $56,000, yielding a $3,300 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. Post-closing BARCELONA INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: General Requirement Journal General Ledger Trial Balance Direct Method Indirect Method Prepare the operating activities section of the statement of cash flows using the indirect method. Ente reductions to net cash provided by operating activities as negative values. Post-closing BARCELONA INCORPORATED Statement of Cash Flows (Indirect Method) Cash flows from operating activities: For Year Ended June 30, 2019 Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities +