Statement of Cash Flows (Indirect Method) The Sky Company's income statement and comparative balance sheets as of December 31 of 2019 and 2018 follow: SKY COMPANY Income Statement For the Year Ended December 31, 2019 Sales Revenue $800,000 Dividend Income 19,000 819,000 Cost of Goods Sold $440,000 Wages and Other Operating Expenses 130,000 39,000 Depreciation Expense Patent Amortization Expense 7,000 Interest Expense 13,000 Income Tax Expense 30,000 Loss on Sale of Equipment 5,000 |(10,000) 654,000 Gain on Sale of Investments $165,000 Net Income SKY COMPANY Balance Sheets Dec.31, 2019 Dec. 31, 2018 Assets Cash and Cash Equivalents $29,000 $63,000 45,000 35,000 Accounts Receivable 100,000 77,000 Inventory Prepaid Expenses 10,000 6,000 Long-term Investments-Available for Sale 50,000 Fair Value Adjustment to Investments 7,000 190,000 Land 100,000 Buildings 350,000 445,000 Accumulated Depreciation Buildings (75,000) (91,000) Equipment 179,000 225,000 Accumulated Depreciation-Equipment (42,000) (46,000) Patents 50,000 32,000 Total Assets $949,000 $790,000 Liabilities and Stockholders' Equity Accounts Payable $21,000 $18,000 Interest Payable 6,000 5,000 Income Tax Payable 8,000 12,000 Bonds Payable 135,000 130,000 Preferred Stock ($100 par value) 100,000 75,000 Common Stock ($5 par value) 379,000 364,000 Paid-in-capital in Excess of Par Value-Common 133,000 124,000 Retained Earnings 167,000 55,000 Unrealized Gain on Investments 7,000 Total Liabilities and Stockholders' Equity $949,000 $790,000 b. Use a negative sign with cash outflow answers. SKY COMPANY Statement of Cash Flows For Year Ended December 31, 2019 Cash Flow from Operating Activities Net Income $ 165,000 Add (deduct) items to convert net income to cash basis Depreciation 39,000 7,000 Patent Amortization Loss on Sale of Equipment 5,000 (10,000) Gain on Sale of Investments (10,000) Accounts Receivable Increase (23,000) Inventory Increase Prepaid Expenses Increase (4,000) Accounts Payable Increase 3,000 Interest Payable Increase 1,000 Income Tax Payable Decrease (4,000) Cash Flow Provided by Operating Activities (4,165) Cash Flow from Investing Activities Sale of Investments 0 x Purchase of Land 0 x 0 X Improvements to Building Sale of equipment 0 x 0 x Cash Used by Investing Activities Cash Flow from Financing Activities Issuance of Bonds Payable 0 x 0 x Issuance of Common Stock 0 x Payment of Dividends 0 x Cash Used by Financing Activities 0 x NetChange in Cash 0 x Cash at Beginning of Year Cash at End of Year 0 X $