I-The following information is available for the Arthur Corporation:

Arthur Corporation

Balance Sheets

At December 31

2007

2006

Assets:

Cash...........................................................................

$24,640

$23,040

Accounts receivable...................................................

32,180

29,400

Merchandise inventory...............................................

73,125

61,710

Long-term investments..............................................

55,900

56,400

Equipment...................................................................

175,500

145,500

Accumulated depreciation..........................................

(33,550

)

(31,200

)

Total assets...................................................................

$327,795

$284,850

Liabilities:

Accounts payable.......................................................

$65,000

$40,380

Income taxes payable................................................

10,725

10,200

Bonds payable............................................................

48,750

66,000

Total liabilities.................................................................

$124,475

$116,580

Equity:

Common stock...........................................................

117,000

96,000

Contributed capital in excess of par..........................

13,000

9,000

Retained earnings......................................................

73,320

63,270

Total equity.................................................................

$203,320

$168,270

Total liabilities and equity..............................................

$327,795

$284,850

Arthur Corporation

Income Statement

For Year Ended December 31, 2007

Sales............................................................

$240,000

Cost of goods sold......................................

$80,900

Depreciation expense.................................

29,400

Other operating expenses..........................

48,000

Interest expense.........................................

2,000

(160,300

)

Other gains (losses):

Loss on sale of equipment.......................

(8,400

)

Income before taxes...................................

71,300

Income taxes expense................................

(27,650

)

Net income..................................................

$43,650

Additional Information:

(1)There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.

(2)Old equipment with an original cost of $37,550 was sold for $2,100 cash.

(3)New equipment was purchased for $67,550 cash.

(4)Cash dividends of $33,600 were paid.

(5)Additional shares of stock were issued for cash.

Prepare a complete statement of cash flows for calendar-year 2007 using the direct and indirect method. l