Data for Virtual Gaming Systems is provided in P11-4B.

P11-4B

The income statement, balance sheet, and additional information for Virtual Gaming Systems are provided.

Additional Information for 2012:
1. Purchase additional investment in stocks for $85,000.
2. Sell land costing $50,000 for $52,000, resulting in a $2,000 gain on sale of land.
3. Purchase $20,000 in equipment by borrowing $20,000 with a note payable due in three years. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $110,000.
5. Issue common stock for $50,000.
Required:
Prepare the statement of cash flows for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note.

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VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2012 Revenues Gain on sale of land $2,500,000 2000 2,502,000 Total revenues Cost of goods sold Operating expenses Depreciation expense Interest expense Income tax expense $1,600,000 605,000 23,000 24,000 70,000 2 322000 $ 180,000 Total expenses Net income VIRTUAL GAMING SYSTEMS Balance Sheet 2012 2011 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent $199,000 75,000 145,000 4,000 $144,000 90,000 135,000 6,000 Long-term assets: Investments Land Equipment Accumulated depreciation 185,000 210,000 230,000 100,000 260,000 210,000 (105,000) $840,000 Total assets $920,000 Liabilities and Stockholders' Equit Current liabilities: Accounts payable Interest payable Income tax payable S 30,000 4,000 21,000 $ 88,000 3,000 24,000 Long-term liabilities: Notes payable 245,000 225,000 Stockholders' equity: Common stock Retained earnings 350,000 270,000 $920,000 300,000 200,000 $840,000 Total liabilities and stockholders' equity