P17-7A The following are the financial statements of Nosker Company. NOSKER COMPANY Comparative Balance Sheets December 31 Assets 2017 Cash $ 38,000 Accounts receivable 30,000 Inventory 27,000 Equipment 60,000 Accumulated depreciation equipment (29,000) Total $126,000 Liabilities and Stockholders' Equity Accounts payable $ 24,000 Income taxes payable 7,000 Bonds payable 27,000 Common stock 18,000 Retained earnings 50,000 Total $126,000 2016 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108,000 NOSKER COMPANY Income Statement For the Year Ended December 31, 2017 Sales revenue $242,000 Cost of goods sold 175,000 Gross profit 67,000 Operating expenses 24,000 Income from operations 43,000 Interest expense 3,000 Income before income taxes 40,000 Income tax expense 8,000 Net income $ 32,000 Additional data: 1. Dividends declared and paid were $20,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow