The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2020 appear below.

Net income of $44,000 was reported, and dividends of $33,000 were paid in 2020. New equipment was purchased and none was sold.

Instructions

a. Prepare a statement of cash flows for the year 2020.

b. Compute the current ratio (current assets ? current liabilities) as of January 1, 2020, and December 31, 2020, and compute free cash flow for the year 2020.

c. In light of the analysis in (b), comment on Madrasah?s liquidity and financial flexibility.

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Madrasah Corporation Balance Sheets Inc./Dec. Assets Dec. 31, 2020 Jan. 1, 2020 $ 20,000 $ 13,000 $ 7,000 Inc. Cash Accounts receivable 106,000 88,000 18,000 Inc. Equipment Less: Accumulated depreciation-equipment 39,000 22,000 17,000 Inc. 17,000 11,000 6,000 Inc. Total $148,000 $112,000 Liabilities and Stockholders' Equity $ 20,000 $ 15,000 Accounts payable 5,000 Inc. Common stock 100,000 80,000 20,000 Inc. Retained earnings 28,000 17,000 11,000 Inc. Total $148,000 $112,000