vod. direct Method) The Sky Company's income statement and compara- tive balance sheets as of December 31 of 2019 and 2018 follow: SKY COMPANY Income Statement For Year Ended December 31, 2019 LO2 X HUTH Sales revenue. Dividend income Cost of goods sold Wages and other operating expenses Depreciation expense..... Patent amortization expense Interest expense. Income tax expense Loss on sale of equipment Gain on sale of investments. Net income $800,000 19.000 819,000 $440,000 130,000 39,000 7,000 13,000 30,000 5,000 (10,000) 654,000 $165,000 SKY COMPANY Balance Sheets Dec. 31, 2019 Dec. 31, 2018 $ 63,000 45,000 100,000 10,000 Assets Cash and cash equivalents Accounts receivable. Inventory... Prepaid expenses. Long-term investments-available for sale Fair value adjustment to investments. Land. Buildings. Accumulated depreciation-Buildings Equipment ... Accumulated depreciation-Equipment. Patents. Total assets 190,000 445,000 (91,000) 179,000 (42,000) 50,000 $949,000 $ 29,000 35,000 77,000 6,000 50,000 7,000 100,000 350,000 (75,000) 225,000 (46,000) 32,000 $790,000 nantin continued from previous page SKY COMPANY Balance Sheets Dec. 31. 2019 Dec.31 2015 Llabilities and Stockholders' Equity Accounts payable Interest payable Income tax payable Bonds payable Preferred stock ($100 par value) Common stock ($5 par value) Paid-in-capital in excess of par value-Common. Retained earnings Unrealized gain on investments Total liabilities and stockholders' equity $ 21,000 6.000 8,000 135.000 100,000 379,000 133,000 167.000 $ 18,000 5.000 12.000 130,000 75.000 364.000 124.000 55,000 7,000 $790.000 $949,000 During the year, the following transactions occurred: 1. Sold long-term investments costing $50,000 for $60.000 cash. Unrealized gains totaling $7,000 related to these investments had been recorded in earlier vears. At year-end, the fair value adjust eliminated 2. Purchased land for cash. 3. Capitalized an expenditure made to improve the building. 4. Sold equipment for $14.000 cash that originally cost $46,000 and had $27,000 accumulated depreciation. 5. Issued bonds payable at face value for cash. 6. Acquired a patent with a fair value of $25,000 by issuing 250 shares of preferred stock at par value. 7. Declared and paid a $53.000 cash dividend. 8. Issued 3,000 shares of common stock for cash at $8 per share. 9. Recorded depreciation of $16,000 on buildings and $23,000 on equipment. Required Calculate the change in cash and cash equivalents that occurred during 2019. b. Prepare a statement of cash flows using the indirect method. a
