Cash flows case: (indirect method).

x Company has not yet prepared the statement of cash flows. The Balance sheet as of December 31, 2020, January 1, 2020 and the additional information regarding the statement of income and retained earnings for the year are presented below.

x Company

Comparative Balance Sheet

(Dollars in Millions)

Assets 12/31/2020 1/1/2020

Current Assets:

Cash $ 49 $79

Account Receivables 645 580

Inventory 660 615

Total Current Assets 1,354 1,274

Property, Plant, and Equipment 1,515 1,466

Less Accumulated Depreciation 765 641

Net Property, Plant, and Equipment 750 825

Total Assets $2,104 $2,099

Liability and Equity

Current Liability:

Account payable $250 $155

Accrued Liability 190 165

Income tax payable 76 70

Total current Liability $516 $390

Bonds payable 450 620

Total Liability 966 1,010

Stockholders Equity:

Common Stock 161 161

Retained earnings 977 928

Total Stockholders Equity 1,138 1,089

Total Liability and Stockholders Equity $2,104 $2,099

Horany Income statement ((Dollars in Millions)

Net Income $3,600

Cost of goods sold 2,550

Gross Margin 1,050

Selling and administrative Expenses 875

Net Operating Income 175

Nonoperation items:

Gain on sale of Equipment 4

Income before Taxes 179

Income tax 63

Net Income $ 116

x also provided the following information:

1. The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million. The cash proceeds from the sale were $8 million. The gain on the sale was $3 million.
2. The company did not issue any bonds during the year.
3. The company paid a cash dividend during the year.
4. The company did not complete any common stock transactions during the year.

Required:

1. Prepare a statement of cash flows for the year using the indirect method.
2. Compute xs free cash flow
3. Assume that x has sales of $3,800, Net income of $135, and net cash provided by operating activities of $150 in the prior year. Prepare a memo that summarizes your interpretations of xs financial performance.
4. Use the analysis of x Company to illustrate how information in the balance sheet and the statement of cash flows helps the users of the financial statements.

please show the calculations