1.) Prepare a statement of cash flows for Ivanhoe Company using the direct method.

2.) Compute free cash flow.

Presented below are the financial statements of lvanhoe Company. Ivanhoe Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total 2017 2016 $104,300 59,600 41,720 59,600 59,600 83,440 178,800 232,440 (95,360) (71,520) $330,780 $321,840 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 56,620 $44,700 23,840 98,340 41,720 149,000 113,240 $330,780 $321,840 20,860 50,660 53,640 Ivanhoe Company Income Statement For the Year Ended December 31,2017 $721,160 521,500 199,660 Sales revenue Cost of goods sold Gross proft Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $53,640 17,880 71,520 128,140 8,940 119,200 23,840 $95,360 Additional data: 1. Depreciation expense was $52,150. 2. Dividends declared and paid were $59,600. 3. During the year equipment was sold for $25,330 cash. This equipment cost $53,640 originally and had accumulated depreciation of $28,310 at the time of sale. Further analysis reveals the following. Accounts payable pertain to merchandise suppliers. All operating expenses except for depreciation were paid in cash. All depreciation expense is in the selling expense category. All sales and purchases are on account. 1. 2. 3. 4. Presented below are the financial statements of lvanhoe Company. Ivanhoe Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total 2017 2016 $104,300 59,600 41,720 59,600 59,600 83,440 178,800 232,440 (95,360) (71,520) $330,780 $321,840 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 56,620 $44,700 23,840 98,340 41,720 149,000 113,240 $330,780 $321,840 20,860 50,660 53,640 Ivanhoe Company Income Statement For the Year Ended December 31,2017 $721,160 521,500 199,660 Sales revenue Cost of goods sold Gross proft Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $53,640 17,880 71,520 128,140 8,940 119,200 23,840 $95,360 Additional data: 1. Depreciation expense was $52,150. 2. Dividends declared and paid were $59,600. 3. During the year equipment was sold for $25,330 cash. This equipment cost $53,640 originally and had accumulated depreciation of $28,310 at the time of sale. Further analysis reveals the following. Accounts payable pertain to merchandise suppliers. All operating expenses except for depreciation were paid in cash. All depreciation expense is in the selling expense category. All sales and purchases are on account. 1. 2. 3. 4