E5-16 (L05,6) (Preparation of a Statement of Cash Flows) A comparative balance sheet for Shabbona Corporation is presented below.

Additional information:
1. Net income for 2017 was $125,000. No gains or losses were recorded in 2017.
2. Cash dividends of $60,000 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.
Instructions

(a) Prepare a statement of cash flows for 2017 for Shabbona Corporation.

(b) Determine Shabbona Corporation’s current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financial flexibility.

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Assets Cash Accounts receivable Inventory Land Equipment Accumulated depreciation-equipment Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings Total December 31 2017 2016 $ 73,000 $ 22,000 82,000 66,000 180,000 189,000 71,000 110,000 260,000 200,000 (69,000) (42,000) $597,000 $545,000 $ 34,000 $ 47,000 150,000 200,000 214,000 164,000 199,000 134,000 $597,000 $545,000