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. Wilson.

Rivers Company Comparative Balance Sheet December 31, 2011, and 2010
	2011		2010
Assets
Current assets:
Cash	$	20,000	$	39,000
Accounts Receivable		206,000		216,500
Inventory		254,500		199,000
Prepaid expenses		10,500		21,000
Total current assets		491,000		475,500
Long-term investments		105,000		145,000
Plant and equipment		870,000		755,000
Less accumulated depreciation		212,500		191,500
Net plant and equipment		657,500		563,500
Total assets	$	1,253,500	$	1,184,000
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable	$	179,500	$	235,500
Accrued liabilities		8,500		16,000
Income taxes payable		46,000		41,500
Total current liabilities		234,000		293,000
Bonds Payable		215,000		110,000
Total liabilities		449,000		403,000
Stockholders equity:
Common stock		607,500		625,000
Retained earnings		197,000		156,000
Total stockholders' equity		804,500		781,000
Total liabilities and stockholders' equity	$	1,253,500	$	1,184,000

Rivers Company Income Statement For the Year Ended December 31, 2011

Sales			$	900,000
Cost of goods sold				562,500
Gross margin				337,500
Selling and administrative expenses				240,750
Net operating income				96,750
Non operating items:
Gain on sale of investments	$	22,500
Loss on sale of equipment		(7,000)		15,500
Income before taxes				112,250
Income taxes				33,650
Net income			$	78,600

The following additional information is available for the year 2011:

a.	The company sold long-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.
e.	The company did not retire any bonds during the year.

Required:
1.	Using the indirect method, determine the net cash provided by/used by operating activities for 2011.(Negative amount should be indicated by a minus sign.)

2.	Prepare a statement of cash flows for 2011. (Amounts to be deducted and negative amounts should be indicated with a minus sign.)

3.	Compute free cash flow for 2011. (Negative amount should be indicated by a minus sign.)