Cassandra Corporation's comparative balance sheets are presented below.

Cassandra Corporation Comparative Balance Sheets December 31 Cash Accounts receivable Investments Equipment Accumulated depreciation—equipment Total Accounts payable Bonds payable Common stock Retained earnings Total Additional information:

1. Net income was $18,300. Dividends declared and paid were $14,600.

2. Equipment which cost $10,000 and had accumulated depreciation of $1,800 was sold for $3,500.

3. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation.

Instructions 2014

$ 17,000 25,200 20,000 60,000

(14,000)

$108,200

$ 14,600 10,000 50,000 33,600

$108,200 2013

$ 17,700 22,300 16,000 70,000

(10,000)

$116,000

$ 11,100 30,000 45,000 29,900

$116,000

(a) Prepare a statement of cash flows for 2014 using the indirect method.

(b) Compute free cash flow.

*E13-10 Comparative balance sheets for Erisa Magambo Company are presented below.

Erisa Magambo Company Comparative Balance Sheets December 31 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 Additional information:

. Net income for 2014 was $120,000.

. Cash dividends of $70,000 were declared and paid.

. Common stock was issued for $50,000 cash.

. Depreciation expense was $24,000.

. Sales for the year were $978,000.

Instructions BWN Dm Prepare a worksheet for a statement of cash flows for 2014 using the indirect method. Enter the reconciling items directly on the worksheet, using letters to cross-reference each entry.