Assets 2017 2018

Cash $33,000 $18,000

Accounts Receivable 14,000 25,000

Inventory 25,000 45,000

Equipment 78,000 70,000

Accumulated Depreciation Equipment (24,000) (27,000)

Net Equipment 54,000 43,000

Total Assets 126,000 131,000

Liabilities and Stockholders Equity

Accounts Payable $43,000 $31,000

Income taxes payable 20,000 24,000

Bonds payable 10,000 20,000

Total Liabilities 73,000 75,000

Common stock 25,000 25,000

Retained Earnings 28,000 31,000

Total Equity 53,000 56,000

Total Liabilities + Equity 126,000 131,000

Presented below is the income statement for ABC Company for 2018:

Sales revenue $286,000

COGS 204,000

Gross Profit 82,000

Operating Expenses 37,000

Income from operations 45,000

Interest expense 7,000

Income before income taxes 38,000

Income tax expense 10,000

Net income 28,000

Additional Information:

Depreciation expense was $6,000

Dividends of $25,000 were declared and paid

During the year, equipment was sold for $12,000 cash. This equipment cost $15,000 originally and had accumulated depreciation of $3,000 at the time of sale.

Additional equipment was purchased for $7,000 cash.

Prepare the statement of cash flows and compute free cash flow for ABC Company.