PREPARING A STATEMENT OF CASH FLOWS
Erie Company reported the following comparative balance sheets for 2009:
|
Assets:
|
2009 |
2008 |
|
Cash
|
$ 33,200
|
$ 12,000
|
|
Accounts receivable
|
53,000
|
45,000
|
|
Inventory
|
29,500
|
27,500
|
|
Prepaid rent
|
2,200
|
6,200
|
|
Long-term investments
|
17,600
|
31,800
|
|
Property, plant, and equipment
|
162,000
|
150,000
|
|
Accumulated depreciation
|
(61,600)
|
(56,200)
|
|
Total assets
|
$235,900
|
$216,300
|
|
Liabilities and Equity:
|
|
|
|
Accounts payable
|
$ 16,900
|
$ 18,000
|
|
Interest payable
|
3,500
|
4,800
|
|
Wages payable
|
9,600
|
7,100
|
|
Income taxes payable
|
5,500
|
3,600
|
|
Notes payable
|
28,000
|
53,000
|
|
Common stock
|
100,000
|
70,000
|
|
Retained earnings
|
72,400
|
59,800
|
|
Total liabilities and equity
|
$235,900
|
$216,300
|
Additional information:
a. Net income for 2009 was $20,500.
b. Cash dividends of $7,900 were declared and paid during 2009.
c. Long-term investments with a cost of $35,000 were sold for cash at a gain of $4,100. Additional long-term investments were purchased for $20,800 cash.
d. Equipment with a cost of $15,000 and accumulated depreciation of $13,500 was sold for $3,800 cash. New equipment was purchased for $27,000 cash.
e. Depreciation expense was $18,900.
f. A principal payment of $25,000 was made on long-term notes.
g. Common stock was sold for $30,000 cash.
Required:
Prepare a statement of cash flows for Erie, using the indirect method to compute net cash flow from operating activities.