The comparative balance sheet of Medalist Athletic Apparel Co. at December 31, 2007 and 2006, is as follows:

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2007 are as follows:
a. Net income, $61,500.
b. Depreciation reported on the income statement, $17,900.
c. Equipment was purchased at a cost of $47,500, and fully depreciated equipment costing $12,500 was discarded, with no salvage realized.
d. The mortgage note payable was not due until 2011, but the terms permitted earlier payment without penalty.
e. 4,000 shares of common stock were issued at $26 for cash.
f. Cash dividends declared and paid, $48,000.

Instructions
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operatingactivities.

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Dec. 31, 2007 Dec. 31, 2006 Assets Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Equipment Accumulated depreciation-equipment Total 37,200 61,200 91,000 5,500 190,500 (41,200) 45,300 65,400 85,600 4,000 155,500 (35,800) 320,000 $344,200 Liabilities and Stockholders' Equity 67,100 Accounts payable (merchandise creditors) Mortgage note payable Common stock, $1 par Paid-in capital in excess of pa Retained earnings Total 14,000 200,000 63,100 $344,200 65,400 95,000 10,000 100,000 49,600 $320,000 stock