Preparing a Statement of Cash Flows (Indirect Method) Audio City, Inc. is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Current Year Previous Year Balance Sheet at December 31 Cash $ 47,500 $ 54,000 Accounts Receivable 13,000 17,500 Inventory 19,000 17,500 Equipment 213,000 145,000 Accumulated Depreciation–Equipment (52,500 ) (40,000 ) $ 240,000 $ 194,000 Accounts Payable $ 7,500 $ 18,000 Salaries and Wages Payable 2,000 1,000 Note Payable (long-term) 57,500 70,000 Common Stock 90,000 65,000 Retained Earnings 83,000 40,000 $ 240,000 $ 194,000 Income Statement Sales Revenue $ 185,000 Cost of Goods Sold 85,000 Other Expenses 52,500 Net Income $ 47,500 Additional Data: a. Bought equipment for cash, $68,000. b. Paid $12,500 on the long-term note payable. c. Issued new shares of stock for $25,000 cash. d. Dividends of $4,500 were paid in cash. e. Other expenses included depreciation, $12,500; salaries and wages, $17,500; taxes, $22,500. f. Accounts Payable includes only inventory purchases made on credit. Because a liability relating to taxes does not exist, assume that they were fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)