Presented below are the financial statements of Ortega Company.

ORTEGA COMPANY
Income Statement
For the year ended December 31, 2011
Sales ................ $286,000
Cost of goods sold ........... . 204,000
Gross profit .............. 82,000
Operating expenses ........... 37,000
Income from operations .......... 45,000
Interest expense ............. 7,000
Income before income taxes ........ 38,000
Income tax expense ............ 10,000
Net Income ............. $ 28,000

Additional data:
1. Dividends of $23,000 were declared and paid.
2. During the year equipment was sold for $10,000 cash. This equipment cost $15,000 originally and had a book value of $10,000 at the time of sale.
3. All depreciation expense $8,000 is in the operating expenses.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $7,000 cash.

Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute free cashflow.

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ORTEGA COMPANY Comparative Statements of Financial Position December 31 Assets 2011 2010 78.000 Property. plant. and equipment Less: Accumulated depreciation Merchandise inventory Accounts receivable Cash 70.000 27.000 S 43.000 41.000 25,000 24.000 $133.000 24.000 54,000 25,000 14,000 33,000 $126,000 Total Equity and Liabilities Share capital ordinary Retained earnings Bonds payable Accounts payable Income taxes payable 25.000 33,000 20.000 31.000 24.000 S133.000 25,000 28.000 10.000 43.000 20,000 S126.000 Total