2 3 4 1 Question 2 Prepare a statement of cash flows - direct method, and compute free cash flow. NOSKER COMPANY Comparative Balance Sheet December 31 5 6 7 Assets 2020 2019 8 Cash $38,000 9 Accounts Receivable 30,000 14,000 10 Inventory 27,000 20,000 11 Equipment 60.000 78,000 12 Accumulated depreciation-equipme -29,000 -24,000 13 Total $126,000 14 15 Liabilities and Stockholders' Equity 16 Accounts payable $24.000 $15,000 17 Income taxes payable 7,000 8,000 18 Bonds payable 27,000 33,000 19 Common stock 18.000 14,000 20 Retained earnings 50,000 38,000 21 Total $126,000 22 NOSKER COMPANY Income Statement For the Year ended December 31, 2020 Sales revenue $242,000 Cost of goods sold 175,000 Gross profit 87,000 Operating expenses 24,000 Income from operations 43.000 Interest expense 3,000 Income before income taxes 40,000 Income tax expense 8,000 Net income $32,000 37 Additional data: 1. Dividends declared and paid were $20,000. 32. During the year equipment was sold for $8,500 pash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 40 41 2. All depreciation expense, $14,500, is in the operating expenses 42 4. All sales and purchases are on account. 43 44 Data for Nosker Company is presented above. Further anlaysis reveals the following. 45 1. Accounts payable pertain to merchandise suppliers. 4 2. All operating expenses except for depreciation were paid in cash. 47 48 Instructions 49 (a) Preapare a statement of cash flows using the direct method. so (b) Compute free cash flow. 62 62 SA After you have completed the requirements of P10-BA consider the additional question 1 Assume that the 2020 balances for accounts receivable, inventory, and accounts payable changed to $28,000, $30,000 and $23,000 respectively. Dividends declared also changed to 528.000 Show the impact on the statement of cash flows and free cash flow