Use the following financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 20X2 using the indirect method. Assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Equipment Accumulated depreciation Equipment Total assets Liabilities: Accounts payable Income taxes payable Notes payable (long term) Total liabilities Equity: Common stock Paid-in capital in excess of par Retained earnings Total equity Total liabilities and equity Derby Company Balance Sheets At December 31 Derby Company Income Statement For Year Ended December 31, 20X2 Sales Cost of goods sold Depreciation expense Other operating expenses Interest expense Other gains (losses): Gain on sale of equipment Income before taxes Income taxes expense Net income $212,540 43,000 106,260 6.400 20X2 $ 85,600 $ 65,200 56,750 144,850 72,850 157,750 6,080 12,680 280,600 245,600 (80,600) (97,600) $522,280 $427,480 20X1 $ 52,850 $ 45,450 15,240 12,240 59.200 79,200 $127,290 $136,890 200,000 53,000 141.990 $488,000 $394.990 $290.590 $522,280 $427,480 (368,200) 4.700 124,500 41.100 $ 83,400 150,000 40,000 100.590 Additional Information a. A $20,000 note payable is retired at its carrying 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 $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit.