The financial statements of Frank B. Robinson Company appear below.

Additional information: 1. Dividends declared and paid were \($3,000\). 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 is in the selling expense category. 4. All sales and purchases are on account.

Instructions

(a) Prepare a statement of cash flows using the indirect method

(b) Compute the following cash-basis ratios. (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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Assets FRANK B. ROBINSON COMPANY Comparative Balance Sheets December 31 Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 2002 2001 $ 29,000 $ 13,000 28,000 14,000 25,000 35,000 60,000 78,000 (20,000) (24,000) $122,000 $116,000 $ 27,000 $ 23,000 5,000 8,000 27,000 33,000 18,000 14,000 45,000 38,000 $122,000 $116,000