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:

Additional Data:

1. Bought equipment for cash, $38,150.
2. Paid $8,300 on the long-term note payable.
3. Issued new shares for $17,450 cash.
4. No dividends were declared or paid.
5. Other expenses included depreciation, $8,000; wages, $24,500; taxes, $9,750; other, $9,600.
6. 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.

Current Year Prior Year Balance Sheet at December 31 Cash Accounts Receivable Merchandise Inventory Property and Equipment Less: Accumulated Depreciation $ 50,775 48,650 53,800 144, 150 (34,500) $ 35,600 37,400 46,300 106,000 (26,500) $262,875 $198,800 Accounts Payable Wages Payable Note Payable, Long-Term Contributed Capital Retained Earnings $ 45,200 1,685 37,800 91,550 86,640 $ 31,200 2,150 46,100 74,100 45,250 $262,875 $198,800 Income Statement (Current year) Sales Cost of Goods Sold Other Expenses $222,000 128,760 51,850 Net Income $ 41,390 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: Adjustments to reconcile net income to net cash provided by operating activities: Cash flows from investing activities: Cash flows from financing activities: Net increase in cash during the year Cash balance, January 1 Cash balance, December 31