Sharon Feldman, president of Allied Company, considers $41,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $36,000 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. Feldman.

Allied company: Balance sheet

	2011	2010
Assets
Current assets:
Cash	$36,000	$58,200
Accounts Receivable	225,200	237,300
Inventory	268,900	208,600
Prepaid expenses	21,700	40,200
Total current assets	551,800	544,300
Long-term investments	153,000	225,000
Plant and equipment	902,000	771,000
Less accumulated depreciation	220,500	196,300
Net plant and equipment	681,500	574,700
Total assets	$1,386,300	$1,344,000
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable	$193,900	$253,100
Accrued liabilities	10,100	19,200
Income taxes paybable	58,800	49,500
Total current liabilties	262,800	321,800
Bonds Payable	263,000	142,000
Total liabilities	525,800	463,800
Stockholders' equity:
Common stock	647,500	705,000
Retained earnings	213,000	175,200
Total stockholders' equity	860,500	880,200
Total liabilities and stockholders' equity	$1,386,300	$1,344,000

Alleid Company: Income Statement

Sales		$1,220,000
Cost of goods sold		762,500
Gross margin		457,500
Selling and administrative expenses		326,350
Net operating items		131,150
Non operating items:
Gain on sale of investments	$30,500
Loss on sale of equipment	(10,200)	20,300
Income before taxes		151,450
Income taxes		45,330
Net Income		$106,120

The following additional information is available for the year 2011:

a. The company sold long-term investments with an orginal cost of $72,000 for $102,500 during the year.

b. Equipment that had cost $132,000 and on which there was $61,000 in accumilated depreciation was sold during the year for $60,800.

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 stocl were made.

e. The company did not retire any bonds during the year.

Required:

1. Using the indirect method, compute the net cash for operating activities for 2011 (negative amound should be indicated by a minus sign)

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

3. Compute the free cash flow for 2011