Calculating Free Cash Flow [LO3]

Paisley Company prepared the following statement of cash flows for the current year:

Paisley Company Statement of Cash Flows—Indirect Method Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000 Adjustments to convert net income to cash basis:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,000 Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . (50,000)
Increase in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,000)
Decrease in prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 Increase in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Decrease in accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,000)
Increase in income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 (4,000)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . 36,000 Investing activities:
Proceeds from the sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . 24,000 Loan to Allen Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,000)
Additions to plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (120,000)
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . (126,000)
Financing activities:
Increase in bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 Increase in common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000)
Net cash provided by fi nancing activities . . . . . . . . . . . . . . . . . . . . . 110,000 Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000)
Cash balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000 Cash balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47,000 Required:
Compute Paisley Company’s free cash flow for the current year.