The following are the financial statements of Nosker Company.

Nosker Company
Income Statement
For the Year Ended December 31, 2020
Sales revenue ....................................$242,000
Cost of goods sold ...............................175,000
Gross profit ............................................67,000
Operating expenses ..............................24,000
Income from operations .......................43,000
Interest expense .......................................3,000
Income before income taxes .................40,000
Income tax expense ..................................8,000
Net income ............................................$ 32,000

Additional data:
1. Dividends declared and paid were $20,000.
2. During the year, equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.

Instructions
a. Prepare a statement of cash flows using the indirect method.
b. Compute free cash flow.

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Nosker Company Comparative Balance Sheets December 31 Assets 2020 2019 $ 38,000 $ 20,000 Cash Accounts receivable 30,000 14,000 Inventory Equipment Accumulated depreciation-equipment 27,000 20,000 60,000 78,000 (29,000) (24,000) $126,000 Total $108,000 Liabilities and Stockholders’ Equity Accounts payable Income taxes payable Bonds payable $ 24,000 $ 15,000 7,000 8,000 27,000 33,000 Common stock 18,000 14,000 Retained earnings 38,000 50,000 $126,000 $108,000 Total