The 2012 and 2011 balance sheets of Wallace Corporation follow. The 2012 income statement is also provided. Wallace had no noncash investing and financing transactions during 2012. During the year, Wallace sold equipment for $15,400, which had originally cost $13,600 and had a book value of $11,100. Wallace did not issue any notes payable during the year but did issue common stock for $31,000.
Requirements
1. Prepare the statement of cash flows for Wallace Corporation for 2012 using the indirect method.
2. Evaluate Wallace's cash flows for the year. Discuss each of the categories of cash flows in your response.

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Wallace Corporation Income Statement For Year Ended December 31, 2012 Sales revenue $348,000 72,000 $276,000 Cost of goods Gross Operating expenses: Salary and wage expense $25,500 5,400 15,000 Other operating expense Operating income 45,900 $230,100 Other income and expense: Gain on sale of equipment Interest expense S 4,300 9,700 5,400 $224,700 37,400 $187,300 Income before taxes Income tax expense Net i Wallace Corporation Comparative Balance Sheet As of December 31, 2012 and 2011 2012 2011 Assets Current assets: Cash and cash equivalents Accounts receivable Inv Prepaid expenses 47,500 23,500 31,700 29,900 86,200 93,200 2,400 $168,800 $149,000 153,000 138,000 (30,200 (27,300) 3,400 Total current assets Property, plant, and equipment Less: Accumulated depreciation Investments Total assets 116,000 $407,600 $259,700 Liabilities Current liabilities: Accounts payable (inventory purchases) Salaries payable Interest payab Taxes paya Other accrued operating expenses S 33,600 36,700 7,200 2,700 2,200 5,700 18,900 22,700 S 63,100 66,600 77,000 115,000 $140,100 $181,600 Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock Retained e Total stockholders' equity Total liabilities and equity 107,000 76,000 2,100 $267,500 78,100 $407,600 $259,700 160,500