USING FINANCIAL STATEMENTS AND TRANSACTION DATA TO PREPARE A STATEMENT OF CASH FLOWS. Erie Company has the following data for 19x7:

REQUIRED:
Prepare a statement of cash flows for Erie, using the indirect method to compute cash flows from operations.

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BALANCE SHEET ACCOUNT Cash Accounts receivable Inventory Prepaid rent CHANGE $21,200 increase 8,000 increase- 2,000 increase 4,000 decrease Equipment Accumulated depreciation, equipment Long-term investments Accounts payable 12,000 increase 5,400 increase 14,200 decrease Salaries payable Interest payable Income taxes payable Long-term notes payable* Common stock Retained earnings 1,100 decrease 2,500 increase 1,300 decrease 1,900 increase 25,000 decrease 30,000 increase 12,600 increase 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. Depreciation expense was $18,900. Long-term investments with a cost of $35,000 were sold for cash at a gain of $4,100. Addi- tional long-term investments were purchased for $20,800 cash. "A principal payment of $25,000 was made on long-term notes. Common stock was sold for $30,000 cash. "Net income was $20,500, and dividends paid were $7,900.