P17.5B (LO 2, 4) AP Presented below are the financial statements of Gaudette Company. GAUDETTE COMPANY Balance Sheet December 31 to from Assets 2021 2020 $ 33,000 Cash Accounts receivable Inventory Equipment Accumulated depreciation--equipment Total $ 28,000 23,000 41,000 70,000 (27,000) $135,000 14,000 25,000 78,000 (24,000) $126,000 (continued) Liabilities and Shareholders' Equity Accounts payable Income taxes payable Notes payable Common shares Retained earnings Total $ 31.000 26,000 20.000 25,000 33,000 $135,000 $ 43,000 20,000 10,000 25,000 28.000 $126,000 $286,000 194,000 92,000 GAUDETTE COMPANY Income Statement For the Year Ended December 31, 2021 Sales Cost of goods sold Gross profit Selling expenses $28.000 Administrative expenses 9,000 Profit from operations Interest expense Profit before income taxes Income tax expense Profit 37.000 55,000 7.000 48.000 10,000 $ 38,000 Additional information: 11. Dividends of $33,000 were declared and paid. Gaudette reports under ASPE. 2. During the year, equipment was sold for $10,000 cash. This equipment cost $13,000 originally and had a carrying value of $10,000 at the time of sale. 13. All depreciation expense, S6,000, is in the selling expense category. 4. All sales and purchases are on account. Additional equipment was purchased for $5,000 cash. Instructions . Prepare a statement of cash flows using the indirect method. b. Calculate free cash flow. Taking It Further Gaudette Company had a positive cash balance at the beginning and end of 2021. Given that, is it possible that the company could have had a negative cash balance at one or more points during the year? Explain