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, 2021 Net sales $2,600,eee 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 expenses 2,412,000 Net income $ 195,000 2020 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 Assets Current assets: Cash 409,500 Accounts receivable 64,000 Inventory 160,000 Prepaid rent 4,600 Long-term assets: Investments 205,000 Land 215,000 Equipment 250,000 Accumulated depreciation (143,000) Total assets $1,165, 100 Liabilities and Stockholders! Equity Current liabilities: Accounts payable $ 35,000 Interest payable 5,100 Income tax payable 25,000 Long-term liabilities: Notes payable 265,000 Stockholders' equity: Common stock 460,000 Retained earnings 375,000 Total liabilities and stockholders' equity $1,165, 100 $ 343,800 80,000 145,000 7,200 110,000 270,000 220,000 (110,000) $1,066,000 $ 98,000 4,000 29,000 235,000 400,000 300,000 $1,066,000 Additional Information for 2021: 1 Purchase additional investment in stocks for $95,000 2. Sell land costing $55,000 for $62,000, resulting in a $7,000 gain on sale of land 3. Purchase $30,000 in equipment by issuing a $30,000 long-term note payable to the seller. No cash is exchanged in the transaction 4. Declare and pay a cash dividend of $120,000. 5 Issue common stock for $60,000 K Required: Prepare the statement of cash flows using the indirect method Disclose any noncash transactions in an accompanying note (List cash outflows and any decrease in cash as negative amounts.) ncc $ 195,000 VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense Gain (on sale of land) Decrease in accounts payable Decrease in accounts receivable Increase in interest payable Decrease in income tax payable Decrease in prepaid rent Increase in inventory 33,000 (63,000) 1,100 (4.000) 2,600 $ 164,700 Net cash flows from operating activities Cash Flows from Investing Activities Purchase investment in stock Proceeds from sale of land (95.000) (95,000) Net cash flows from investing activities Cash Flows from Financing Activities Issue common stock Payment of cash dividends 60,000 60,000 Net cash flows from financing activities Net increase in cash Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities Purchase equipment issuing a note payable $ 0 $710,000 SOFTWARE ASSOCIATES Income Statement For the year ended December 31, 2021 Net sales Expenses: Cost of goods sold $420,000 Operating expenses 130,000 Depreciation expense 33,000 Income tax expense 49,000 Total expenses Net income 632,000 $ 78,000 SOFTWARE ASSOCIATES Selected Balance Sheet Data December 31, 2021, compared to December 31, 2020 Decrease in accounts receivable $10,000 Decrease in inventory 13,000 Increase in prepaid rent 3,000 Decrease in salaries payable 4,000 Increase in accounts payable 7,000 Increase in income tax payable 8,000 Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the direct method. (List cash outflows as negative amounts.) SOFTWARE ASSOCIATES Statement of Cash Flow (Partial) For the Year Ended December 31, 2021 Cash Flows from Operating Activities Cash received from customers Cash paid to suppliers Cash paid for operating expenses Decrease in prepaid rent Net cash flows from operating activities $ 0