Problem 11-4B Prepare a statement of cash flows-indirect method (LO11-2, 11-3)

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

VIRTUAL GAMING SYSTEMS Income Statement For the Year Ended December 31, 2018
Net sales		$	2,400,000
Gain on sale of land			9,000
Total revenues			2,409,000
Expenses:
Cost of goods sold	$ 1,550,000
Operating expenses	595,000
Depreciation expense	13,000
Interest expense	14,000
Income tax expense	60,000
Total expenses			2,232,000
Net income		$	177,000

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2018		2017
Assets
Current assets:
Cash	$	107,300	$	50,800
Accounts receivable		66,000		80,000
Inventory		130,000		125,000
Prepaid rent		2,800		4,200
Long-term assets:
Investments		175,000		100,000
Land		154,000		199,000
Equipment		210,000		200,000
Accumulated depreciation		(113,000)		(100,000)
Total assets	$	732,100	$	659,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	25,000	$	78,000
Interest payable		3,100		2,000
Income tax payable		32,000		34,000
Long-term liabilities:
Notes payable		255,000		245,000
Stockholders' equity:
Common stock		240,000		200,000
Retained earnings		177,000		100,000
Total liabilities and stockholders equity	$	732,100	$	659,000

Additional Information for 2018:

1. Purchase additional investment in stocks for $75,000.

2. Sell land costing $45,000 for $54,000, resulting in a $9,000 gain on sale of land.

3. Purchase $10,000 in equipment by borrowing $10,000 with a note payable due in three years. No cash is exchanged in the transaction.

4. Declare and pay a cash dividend of $100,000.

5. Issue common stock for $40,000.

Required:

Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note