On the basis of the following data for Seller Co. for 2008 and the preceding year ended December 31, 2007, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.
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Year 2008
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Year 2007
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Cash
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$90,000
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$ 78,000
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Accounts receivable (net)
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78,000
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85,000
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Inventories
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106,500
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90,000
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Equipment
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410,000
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370,000
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Accumulated depreciation
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(150,000)
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(158,000)
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$534,500
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$465,000
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Accounts payable (merchandise creditors)
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$ 53,500
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$ 55,000
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Cash dividends payable
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5,000
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4,000
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Common stock, $10 par
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200,000
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170,000
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Paid-in capital in excess of par-- common stock
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62,000
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60,000
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Retained earnings
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214,000
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176,000
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$534,500
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$465,000
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