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 Vernon Company follow: Assets Cash Accounts receivable Inventory Equipment Balance Sheets As of December 31 Year 2 Year 1 $ 22,708 $ 2,952 1,615 Accumulated depreciation-equipment Land Total assets Liabilities and equity Common stock 6,458 23,082 (11,148) 18,292 $ 61,007 3,008 23,000 32,386 969 6,054 44,352 (18,534) 8,952 $ 44,745 $ 4,222 6,876 9,500 24,147 Accounts payable (inventory) $ 2,613 Long-term debt Retained earnings Total liabilities and equity $ 61,007 $ 44,745 Income Statement For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin Depreciation expense Operating income Gain on sale of equipment Loss on disposal of land Net income $ 32,860 (13,024) 19,836 (3,748) 16,088 450 (60) $ 16,478 Additional Data 1. During Year 2, the company sold equipment for $18,016; it had originally cost $28,700. Accumulated depreciation on this equipment was $11,134 at the time of the sale. Also, the company purchased equipment for $7,430 cash. 2. The company sold land that had cost $4,160. This land was sold for $4,100, resulting in the recognition of a $60 loss. Also, common stock was issued in exchange for title to land that was valued at $13,500 at the time of exchange. 3. Paid dividends of $8,239. Required Prepare a statement of cash flows using the indirect method. (Amounts to be deducted and cash outflows should be indicated by a minus sign.)