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Here are comparative balance sheets for Migitsu Company. Prepare a statement of cash flowsindirect method. MIGITSU COMPANY Comparative Balance Sheets December 31 Assets 2017 2016

Here are comparative balance sheets for Migitsu Company. Prepare a statement of cash flowsindirect method.

MIGITSU COMPANY

Comparative Balance Sheets

December 31

Assets 2017 2016

Cash $ 73,000 $ 22,000

Accounts receivable 87,000 76,000

Inventories 170,000 191,000

Land 72,000 100,000

Equipment 260,000 200,000

Accumulated depreciation (66,000) (32,000)

Total $ 596,000 $ 557,000

Liabilities and Stockholders Equity

Accounts payable $ 37,000 $ 47,000

Bonds payable 150,000 210,000

Common stock ($1 par) 216,000 174,000

Retained earnings 193,000 126,000

Total $ 596,000 $ 557,000

Additional information:

1. Net income for 2017 was $100,000.

2. Cash dividends of $33,000 were declared and paid.

3. Bonds payable amounting to $60,000 were redeemed for cash $60,000.

4. Common stock was issued for $42,000 cash.

5. Equipment that cost $50,000 and had a book value of $30,000 was sold for $36,000 during 2017; land was sold at cost.

Instructions

(a) Prepare a statement of cash flows for 2017 using the indirect method.

(b) Compute free cash flow for 2017.

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