Pharoah Industries manufactures sump-pumps. Its most popular product is called the Super Soaker, which has a retail price of $1,290 and costs $550 to manufacture. It sells the Super Soaker on a standalone basis directly to businesses. Pharoah also provides installation services for these commercial customers, who want an emergency pumping capability (with regular and back-up generator power) at their businesses. Pharoah also distributes the Super Soaker through a consignment agreement with Menards. Income data for the first quarter of 2017 from operations other than the Super Soaker are as follows. Revenues $10,350,000 Expenses 8,391,000 Pharoah has the following information related to two Super Soaker revenue arrangements during the first quarter of 2017.

1. Pharoah sells 3 Super Soakers to businesses in flood-prone areas for a total contract price of $54,100. In addition to the pumps, Pharoah also provides installation (at a cost of $150 per pump). On a standalone basis, the fair value of this service is $200 per unit installed. The contract payment also includes a $10 per month service plan for the pumps for 3 years after installation (Pharoahs cost to provide this service is $7 per month). The Super Soakers are delivered and installed on March 1, 2017, and full payment is made to Pharoah. Any discount is applied to the pump/installation bundle.

2. During ships 300 Super Soakers to Menards on consignment. By March 31, 2017, Menards has sold two-thirds of the consigned merchandise at the listed price of $1,290 per unit. Menards notifies Pharoah of the sales, retains a 5% commission, and remits the cash due Pharoah.

FIND 1: Determine Pharoah Industries 2017 first-quarter net income. (Ignore taxes.)

FIND 2: Determine free cash flow for Pharoah Industries for the first quarter of 2017. In the first quarter, Pharoah had depreciation expense of $160,000 and a net increase in working capital (change in accounts receivable and accounts payable) of $253,000. In the first quarter, capital expenditures were $522,000; Pharoah paid dividends of $126,000.