Presented below are the comparative balance sheets for Dennis Weigle Company as of December 31.

Additional information: 1. Operating expenses include depreciation expense of \($42.000\). 2. Land was sold for cash at book value. 3. Cash dividends of \($27,000\) were paid. 4. Net income for 2002 was \($38,000\). 5. Equipment was purchased for \($95,000\) cash. In addition, equipment costing \($22,000\) with a book value of \($10,000\) was sold for \($8,100\) cash. 6. Bonds were converted at face value by issuing 50,000 shares of \($1\) par value common stock. 7. Net sales for 2002 totaled $420,000.

Instructions

(a) Prepare a statement of cash flows for the year ended December 31, 2002, using the indirect method.

(b) Compute the following cash-basis ratios for 2002. (1) Current cash debt coverage ratio. (2) Cash return on sales ratio. (3) Cash debt coverage ratio. (4) Free cash flow.

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DENNIS WEIGLE COMPANY Comparative Balance Sheets December 31 Assets 2002 2001 Cash $ 39,000 $ 45,000 Accounts receivable 49,500 52,000 Inventory 151,450 142,000 Prepaid expenses 16,780 21,000 Land 100,000 130,000 Equipment 228.000 155,000 Accumulated depreciation-equipment (45,000) (35,000) Building 200,000 200,000 Accumulated depreciation-building (60,000) (40,000) $679,730 $670,000