Here and on page 636 are the financial statements of Molina Company.

Statement of Cash Flows MOLINA COMPANY Income Statement For the Year Ended December 31, 2007 Sales $286,000 Cost of goods sold 194,000 Gross profit 92,000 Selling expenses $28,000 Administrative expenses 9,000 37,000 Income from operations 55,000 Interest expense 7,000 Income before income taxes 48,000 Income tax expense 10,000 Net income $ 38,000 Additional data: 1. Dividends of $33,000 were declared and paid. 2. During the year equipment was sold for $10,000 cash. This equipment cost $13,000 originally and had a book value of $10,000 at the time of sale. 3. All depreciation expense, $6,000, is in the selling expense category.

. All sales and purchases are on account. 5. Additional equipment was purchased for $5,000 cash.

a Instructions

(a) Cash from operations

(a) Prepare a statement of cash flows using the indirect method.

$13,000

(b) Compute these cash-basis measures:

(1) Current cash debt coverage ratio.

(2) Cash debt coverage ratio.

(3) Free cash flow.

Prepare a statement of cash

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MOLINA COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable 2007 2006 $ 28,000 $ 33,000 23,000 14,000 Merchandise inventory 41,000 25,000 Property, plant, and equipment $ 70,000 $ 78,000 Less: Accumulated depreciation (27,000) 43,000 (24,000) 54,000 Total $135,000 $126,000 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 31,000 $ 43,000 26,000 20,000 20,000 10,000 25,000 25,000 33,000 28,000 $135,000 $126,000