XS Supply Company is developing its annual financial statements at December $31,$ current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below:

Current Year Prior Year

Balance sheet at December $31$

Cash $ $34,500$ $ $29,900$

Accounts receivable $35,80029,000$

Merchandise inventory $44,00038,400$

Property and equipment $121,700100,900$

Less: Accumulated depreciation $(31,100)(25,400)$

$ $204,900$ $ $172,800$

Accounts payable $ $36,900$ $ $28,000$

Wages payable $1,7001,900$

Note payable, long$-$term $44,80050,200$

Common stock and additional paid$-$in capital $90,00073,000$

Retained earnings $31,50019,700$

$ $204,900$ $ $172,800$

Income statement for current year

Sales $ $124,000$

Gain on sale of equipment $1,000$

Cost of goods sold $74,000$

Other expenses $39,200$

Net income $ $11,800$

Additional data:

Bought equipment for cash, $$34,800.$ Sold equipment with original cost of $$14,000,$ accumulated depreciation of $$10,000,$ for $$5,000$ cash.

Paid $$5,400$ on the long$-$term note payable.

Issued new shares of stock for $$17,000$ cash.

No dividends were declared or paid.

Other expenses included depreciation, $$15,700$; wages, $$12,800$; taxes, $$6,800$; and other, $$3,900.$

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 $31,$ current year, using the indirect method.$\backslash$table$[[$XS SUPPLY COMPANY$],[$Statement of Cash Flows$],[$For the Year Ended December $31,$ Current Year$],[$Cash flows from operating activities:$],[$Net income,,$$,11,800],[\backslash$table$[[$Adjustments to reconcile net income to net cash provided$],[$by operating activities:$]]],[$Increase in accounts receivable,$(6,800),,],[$Increase in merchandise inventory,$(5,600),,],[$Increase in accounts payable,$8,900,,],[$Decrease in wages payable,$(200),,],[$Depreciation expense,$15,700,,],[$Gain on sale of equipment,$(1,000),,],[,,11,000],[$Net cash provided by operating activities,,,$22,800],[$Cash flows from investing activities:$],[$Cash payments to purchase equipment,$(34,800),,],[$Cash received from sale of equipment,$5,000,,],[$Net cash used in investing activities,,,$(29,800)],[$Cash flows from financing activities:$],[$Cash payments on long$-$term note,$(5,400),,],[$Cash receipts from issuing stock,$17,000,,],[$Net cash provided by financing activities,,,$11,600],[$Net increase in cash during the year,,,$4,600],[$Cash balance, January $1,$ current year$],[$Cash balance, December $31,$ current year,,$$,4,600]]$