Preparing the Statement of Cash Flows Indirect Method

Double Flop Inc., a sporting goods retailer, recently completed its 2021 operations. Double Flop Inc.s balance sheet information and income statement follow.

Double Flop Inc. Income Statement For Year Ended December 31, 2021
Sales		895,240
Cost of goods sold		537,150
Gross Profit		358,090
Operating Expenses:
Depreciation expense	16,000
Other expenses	169,530
Total Operating expenses		185,500
Profit from operations		172,590
Loss on sale of equipment		8,000
Profit		180,590

Double Flop Inc. Comparative Balance Sheet Information
	December 31
	2021	2020
Cash	$64,500	$ 58,450
Accounts receivable	59,875	55,465
Merchandise inventory	93,400	96,300
Equipment	176,500	164,500
Accumulated depreciation	86,500	83,200
Accounts payable	45,600	39,850
Accrued liabilities	5,975	6,345
Notes payable	65,600	89,000
Common shares	95,000	72,000
Retained earnings	95,600	84,320

Additional information regarding Double Flop Inc.s activities during 2021:

1. Equipment with an original cost of $42,000 is sold.
2. Equipment is purchased by paying cash of $24,000 and signing a long-term note payable for the balance.
3. Reduced a long-term note payable by making a payment.
4. Issued 3,000 common shares.
5. Declared and paid cash dividends.

Required

1. Prepare a statement of cash flows for 2021 that reports the cash inflows and outflows from operating activities according to the indirect method, investing activities and financing activities.
2. Prepare a note describing non-cash investing and financing activities.
3. Prepare T-accounts to reconcile the opening and closing balances of the following accounts: PP&E, Accumulated Depreciation, Retained Earnings, Notes Payable and Common Shares.
4. Show your calculation to determine the proceeds on sale of equipment.