XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Balance Sheet at December 31 Cash Accounts Receivable Merchandise Inventory Property and Equipment Less: Accumulated Depreciation Accounts Payable Wages Payable Note Payable, Long-Term Contributed Capital Retained Earnings Income Statement (Current year) Sales Cost of Goods Sold Other Expenses Net Income Current Year Prior Year $ 44,985 $ 31,000 39,750 32,900 46,950 39,000 159,500 134,000 (40,650) (33,500) $250,535 $203,400 $ 44,050 3,325 $ 33,600 3,900 35,200 50,000 103,400 81,100 64,560 34,800 $250,535 $203,400 $183,000 106,140 47,100 $ 29,760 Additional Data: a. Bought equipment for cash, $25,500. b. Paid $14,800 on the long-term note payable. c. Issued new shares for $22,300 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $7,150; wages, $22,650; taxes, $8,100; other, $9,200. f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash. Required: 1. Prepare the statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.) XS SUPPLY COMPANY Statement of Cash Flows For the Year Ended December 31 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Increase in accounts receivable Increase in merchandise inventory Increase in accounts payable Decrease in wages payable Net cash provided by operating activities Cash flows from investing activities: Cash payments to purchase equipment Net cash used in investing activities Cash flows from financing activities: Cash payments on long-term note Cash receipts from issuing shares Net cash provided by financing activities Net increase in cash during the year Cash balance, January 1 Cash balance, December 31 $ 7,150 (6,850) (7,950) 10,450 (575) $ 29,760 2,225 31,985 (25,500) (25,500) 14,800 22,300 37,100 43,585 31,000 $ 74,585