Cheryl Wilson, president of Rivers Company, considers $25,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $20,000 in cash was available at the end of 2011. Because the company reported a large net income for the year, and also issued bonds and sold some long-term investments, the sharp decline in cash is puzzling to Ms. Wlson Rivers Company Comparative Balance Sheet December 31, 2011, and 2010 2011 2010 Assets Current assets Cash Accounts Receivable S 20,000 $ 39,000 206,000 216,500 199,000 21,000 254,500 10.500 Prepaid expenses Total current assets 491,000 475,500 Long-term investments 105,000 145,000 870,000 755,000 212,500 191,500 Plant and equipment Net plant and equipment 657,500 563,500 Total assets $1,253,500 $1,184,000 Liabilities and Stockholders equity Current liabilities: Accounts payable Accrued iablities income taxes payable s 179,500 235,500 16,000 41,500 8.500 46,000 Total current liabilities Bonds Payable 234,000 293,000 215,000 1,000 Total liabilities 449,000 403,000 Stockholders equity Common stock Retained earnings 607,500 197,000 625,000 156,000 Total stockholders' equity 804,500 781 ,000 Total labilites and stockholders' equity $1.253.500 $1,184,000 Rivers Company Income Statement For the Year Ended December 31, 2011 Sales $ 900,000 ter 12 562,500 Cost of goods sold Gross margin Selling and administrative expenses 337.500 240,750 96,750 Net operating income Non operating items Gain on sale of investments Loss on sale of equipment $22.500 (7,000) 15,500 Income before taxes Income taxes 12,250 33,650 Net income $ 78,600 The following additional information is available for the year 2011 a. The company sold Iong-term investments with an original cost of $40,000 for $62,500 during the year b Equipment that had cost $100.000 and on which there was $45.000 in accumulated depreciation was sold during the year for $48,000 c. The company declared and paid a cash dividend during the year d. The stock of a dissident stockholder was repurchased for cash and retired during the year. No issues of stock were made The company did not retire any bonds during the year e. Required: 1. Using the indirect method, determine the net cash provided bylused by operating activities for 2011 (Negative amount should be indicated by a minus sign.) Net cash operating activities 2. Prepare a statement of cash flows for 2011. (Amounts to be deducted and negative amounts should be indicated with a minus sign.) hapter 12 Rivers Company Statement of Cash Flows- Indirect Method For the Year Ended December 31, 2011 Operating activities Adjustments to convert net income to cash basis Investing activities Financing activities Cash balance, beginning of year Cash balance, end of year 3. Compute free cash flow for 2011. (Negative amount should be indicated by a minus sign,) Free cash flow