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Using the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 2015 using the indirect method.

ERAM Name Derby Company Balance Sheets At December 31 2015 2014 Assets: Cash $85,600 $65,200 Accounts receivable, net 72,850 56,750 Merchandise inventory 157,750 144,850 Prepaid expenses 6,080 12,680 Equipment 280.600) 245,600 Accumulated depreciation-Equipment (80,600) (97,600) Total assets $522,280 $427,480 Liabilities: Accounts payable $52,850 $45,450 Income taxes payable 15,240 12,240 Notes payable (long term) 59,200 79,200 Total liabilities $127,290 $136,890 Equity Common stock 200,000 150,000 Paid-in capital in excess of par i in excess of par L 53,00 40,000 Retained earnings 141,990 100,590 Total equity $394,990 $290,590 Total liabilities and equity $522,280 $427,480 Derby Company Income Statement For Year Ended December 31, 2015 Sales $488,000 Cost of goods sold $212,540 Depreciation expense 43,000 Other operating expenses 106,260 Interest expense 6,400 (368,200) Other gains (losses): Gain on sale of equipment 4,700 Income before taxes 124,500 Income taxes expense 41,100 Net income $83,400 Additional Information a. A $20,000 note payable is retired at its carrying value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit

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