O'Brien Corporation's income statement for the year ended December 31, 2012, and its comparative balances sheets as of December 31, 2012 and 2011, are presented on the next page. During 2012, O'Brien Corporation engaged in these transactions:

(a) Sold at a gain of $3,500 furniture and fixture that cost $17,800, on which it had accumulated depreciation of $14,400.

(b) Purchased furniture and fixtures in the amount of $19,800.

(c) Paid a $10,000 note payable and borrowed $20,000 on a new note.

(d) Converted bonds payable in the amount of $50,000 into 2,000 shares of common stock.

(e) Declared and paid $3,000 in cash dividends.

Required
1. Using the indirect methods, prepare a statement of cash flows for O'Brien Corporation. Include a supporting schedule of noncash investing transactions and financing transactions.
2. What are the primary reasons for O'Brien Corporation's large increase in cash from 2011 to 2012, despite its low net income?
3. Compute and assess cash flow yield and free cash flow for 2012. Compare and contrast what these two performance measure tell you about O'Brien's cash-generatingability.

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0'Brlen Corporation Income Statement For the Year Ended December 31, 2012 Sales Cost of goods sold Gross margin Operating expenses including $804,500 563,900 $240,600 depreciation expense of $23,400) Income from operations Other income (expenses) 224.700 15,900 Gain on sale of furniture and fixtures 3,500 Interest expense Income before income taxes Income taxes expense Net income 11600 (8,100) 7,800 2300 $ 5,500 O'Brlen Corporation Comparatlve Balance Sheets December 31, 2012 and 2011 2012 2011 Assets Cash Accounts receivable (net) Merchandise inventory Prepaid rent Furniture and fixtures Accumulated depreciation- $ 82,400 82,600 175,000 1,000 74,000 25,000 100,000 225,000 1,500 72,000 furniture and fixtures Total assets (21,000) $394,000 (12,000) $411500 Liabliltles and Stockholders' Equity Accounts payable Income taxes payable Notes payable (long-term) Bonds payable Common stock, $20 par value Additional paid-in capital Retained earnings Total liabilities and stockholders' equity 71,700 700 20,000 50,000 120,000 90,720 40,880 $394,000 $100,200 2,200 10,000 100,000 100,000 60,720 38,380 $411,500