Assets Cash JANG COMPANY Comparative Balance Sheets December 31 Accounts receivable Merchandise inventory Property, plant, and equipment Less: Accumulated depreciation $ 69,000 (26,000) Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 2011 $ 24,000 25,000 41,000 43,000 $133,000 $ 78,000 (24,000) 2010 $ 33,000 14,000 25,000 54,000 $126.000 $ 30,000 $ 43,000 25,000 20,000 20,000 10,000 25,000 25,000 33,000 28,000 $133.000 $126,000 JANG COMPANY Income Statement For the Year Ended December 31, 2011 Additional data: Sales $281,000 Cost of goods sold 204,000 Gross profit 77,000 Selling expenses $28,000 Administrative expenses 9,000 37,000 Income from operations 40,000 Interest expense 5,000 35,000 10,000 $ 25,000 Income before income taxes Income tax expense Net income 1. Dividends of $20,000 were declared and paid. 2. During the year equipment was sold for $12,000 cash. This equipment cost $15,000 originally and had a book value of $12,000 at the time of sale. 3. All depreciation expense, $5,000, is in the selling expense category 4. All sales and purchases are on account. 5. Additional equipment was purchased for $6,000 cash. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow.