Problem 14-18A (Algo) Using financial statements to prepare a statement of cash flows-indirect method LO 14-1, 14-3, 14-4 The comparative balance sheets and income statements for Franklin Company follow: Assets Cash Accounts receivable Balance Sheets As of December 31 Year 2 Year 1 $ 25,489 $ 2,808 2,397 1,438) Inventory Equipment Accumulated depreciation-equipment Land Total assets Liabilities and equity 6,404 20,598 (10,699) 17,600 $ 61,789 2,642 22,700 33,726 Accounts payable (inventory) $ 2,721 Long-term debt Common stock Retained earnings Total liabilities and equity $ 61,789 6,004 42,228 (18,262) 8,970 $ 43,186 $ 4,395 6,038 9,500 23,253 $ 43,186 Income Statement For the Year Ended December 31, Sales revenue Cost of goods sold Gross margin Depreciation expense Operating income Gain on sale of equipment Loss on disposal of land Net income Year 2 $ 39,200 (15,537) 23,663 (3,396) 20,267 750 (70) $ 20,947