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 Year 2008 2007 $ 78,000 $90,000 Cash Accounts receivable (net) 78,000 85,000 Inventories 106,500 90,000 Equipment 410,000 370,000 Accumulated depreciation (150,000) (158,000) $534.500 $465.000 $ 53,500 $ 55,000 Accounts payable (merchandise creditors) Cash dividends payable 5,000 4,000 Common stock, S10 par 200,000 170,000 Paid-in capital in excess of par-- 62,000 60,000 common stock Retained eamings 176,000 214,000 $465.000 $534.500