Use the following financial statements and additional information.

BARCELONA INCORPORATED
Comparative Balance Sheets
June 30, 2021 and 2020
	2021	2020
Assets
Cash	$ 86,300	$ 41,700
Accounts receivable, net	78,000	61,000
Inventory	66,000	92,000
Prepaid expenses	5,000	6,300
Total current assets	235,300	201,000
Equipment	153,000	142,000
Accumulated depreciationEquipment	(39,000)	(13,000)
Total assets	$ 349,300	$ 330,000
Liabilities and Equity
Accounts payable	$ 30,000	$ 36,000
Wages payable	8,000	19,000
Income taxes payable	3,600	4,000
Total current liabilities	41,600	59,000
Notes payable (long term)	38,000	75,000
Total liabilities	79,600	134,000
Equity
Common stock, $5 par value	220,000	160,000
Retained earnings	49,700	36,000
Total liabilities and equity	$ 349,300	$ 330,000

BARCELONA INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales		$ 803,000
Cost of goods sold		491,000
Gross profit		312,000
Operating expenses
Depreciation expense	$ 68,000
Other expenses	77,000
Total operating expenses		$ 145,000
		167,000
Other gains (losses)
Gain on sale of equipment		3,300
Income before taxes		170,300
Income taxes expense		52,130
Net income		$ 118,170

Additional Information

1. A $37,000 note payable is retired at its $37,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $67,000 cash.
4. Received cash for the sale of equipment that had cost $56,000, yielding a $3,300 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Prepare the operating activities section of the statement of cash flows using the indirect method. Enter reductions to net cash provided by operating activities as negative values.

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Unadjusted Adjusted Post-closing

Post-closing

BARCELONA INCORPORATED
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2021
Cash flows from operating activities:
Net income		$118,170
Adjustments to reconcile net income to net cash provided by operating activities:
Income statement items not affecting cash
Depreciation expense	$68,000
Gain on sale of equipment
Changes in current operating assets and liabilities
Increase in accounts receivable
Decrease in inventory
Decrease in prepaid expenses
Decrease in accounts payable
Decrease in wages payable
Decrease in income taxes payable
		68,000
		$186,170
Net cash provided by operating activities, using the direct method:		$786,000