Problem $4$B

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

Virtual Gaming Systems

Income Statement

For the year ended December, $31,2024$

Net Sales

$ $2,600,000$

Gain on sale of land

$7,000$

Total Revenues

$2,607,000$

Expenses:

Cost of goods Sold

$ $1,650,000$

Operating Expenses

$615,000$

Depreciation Expense

$33,000$

Interest Expense

$34,000$

Income tax expense

$80,000$

Total expense

$2,412,000$

Net income

$ $195,000$

Virtual Gaming Systems

Balances Sheets

December $31$

Assets

$2024$

$2023$

Current assets:

Cash

$ $409,500$

$ $343,800$

Accounts Receivable

$64,000$

$80,000$

Inventory

$160,000$

$145,000$

Prepaid rent

$4,600$

$7,200$

Long$-$term assets:

Investments

$205,000$

$110,000$

Land

$215,000$

$270,000$

Equipment

$250,000$

$220,000$

Accumulated depreciation

$-143,000$

$-110,000$

Total assets

$ $1,165,100$

$ $1,066,000$

Liabilities and Stockholder' Equity

Current Liabilities

Accounts Payable

$ $35,000$

$ $98,000$

Interest Payable

$5,100$

$4,000$

Income Tax Payable

$25,000$

$29,000$

Long$-$term Liabilities

Notes Payable

$265,000$

$235,000$

Stockholder' Equity

Common Stock

$460,000$

$400,000$

Retained Earnings

$375,000$

$300,000$

Total Liabilities and stockholder' equity

$ $1,165,100$

$ $1,066,000$

Additional Information:

Purchased additional investment in stocks for $$95,000$

Sold land for $ $62,000.$ The land originally was purchased for $$55,000,$ resulting in a $$7,000$ gain being recorded at the time of the sale.

Purchased $$30,000$ in equipment by issuing a $$30,000$ long$-$term note payable to the seller. No cash was exchanged in the transaction.

Declared and paid a cash dividend of $$120,000.$

Issued common stock for $$60,000.$

Required:

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