Sharon Feldman, president of Allied Company, considers $46,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $41,000 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 Comparative Balance Sheet December 31, 2011, and 2010
	2011	2010
Assets
Current assets:
Cash	$	41,000	$	64,200
Accounts Receivable		231,200		243,800
Inventory		273,400		211,600
Prepaid expenses		25,200		46,200
Total current assets		570,800		565,800
Long-term investments		168,000		250,000
Plant and equipment		912,000		776,000
Less accumulated depreciation		223,000		197,800
Net plant and equipment		689,000		578,200
Total assets	$	1,427,800	$	1,394,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	198,400	$	258,600
Accrued liabilities		10,600		20,200
Income taxes payable		62,800		52,000
Total current liabilities		271,800		330,800
Bonds Payable		278,000		152,000
Total liabilities		549,800		482,800
Stockholders equity:
Common stock		660,000		730,000
Retained earnings		218,000		181,200
Total stockholders' equity		878,000		911,200
Total liabilities and stockholders' equity	$	1,427,800	$	1,394,000

Allied Company Income Statement For the Year Ended December 31, 2011
Sales		$	1,320,000
Cost of goods sold			825,000
Gross margin			495,000
Selling and administrative expenses			353,100
Net operating income			141,900
Nonoperating items:
Gain on sale of investments	$33,000
Loss on sale of equipment	(11,200)		21,800
Income before taxes			163,700
Income taxes			48,980
Net income		$	114,720

The following additional information is available for the year 2011:

a.	The company sold long-term investments with an original cost of $82,000 for $115,000 during the year.
b.	Equipment that had cost $142,000 and on which there was $66,000 in accumulated depreciation was sold during the year for $64,800.
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 stock 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 amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Net cash(Click to select)provided byused inoperating activities

$

2.	Prepare a statement of cash flows for 2011.(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

Allied Company Statement of Cash Flows For the Year Ended December 31, 2011
Operating activities:
(Click to select)Net lossNet income		$
Adjustments to convert net income to cash basis:
(Click to select)Increase in prepaid expensesIncrease in income taxes payableDecrease in inventoryIncrease in inventoryDecrease in accrued liabilitiesIncrease in accounts payableGain on sale of investmentsLoss on sale of equipmentDecrease in accounts receivableDecrease in prepaid expensesDepreciationDecrease in accounts payable	$
(Click to select)Decrease in accounts receivableDecrease in inventoryDecrease in prepaid expensesDecrease in accounts payableDecrease in accrued liabilitiesIncrease in income taxes payableLoss on sale of equipmentDepreciationIncrease in inventoryGain on sale of investmentsIncrease in accounts payableIncrease in prepaid expenses
(Click to select)Increase in inventoryDecrease in inventoryIncrease in prepaid expensesDecrease in accounts payableIncrease in accounts payableLoss on sale of equipmentGain on sale of investmentsDecrease in accounts receivableDepreciationDecrease in accrued liabilitiesDecrease in prepaid expensesIncrease in income taxes payable
(Click to select)Decrease in prepaid expensesDecrease in inventoryIncrease in income taxes payableDecrease in accrued liabilitiesIncrease in inventoryIncrease in prepaid expensesGain on sale of investmentsDecrease in accounts receivableLoss on sale of equipmentIncrease in accounts payableDepreciationDecrease in accounts payable
(Click to select)Decrease in prepaid expensesIncrease in prepaid expensesDecrease in accounts receivableDecrease in inventoryIncrease in accounts payableDecrease in accounts payableDepreciationIncrease in inventoryGain on sale of investmentsIncrease in income taxes payableDecrease in accrued liabilitiesLoss on sale of equipment
(Click to select)Decrease in accrued liabilitiesLoss on sale of equipmentIncrease in income taxes payableIncrease in inventoryDecrease in accounts payableIncrease in accounts payableDecrease in prepaid expensesGain on sale of investmentsDecrease in accounts receivableIncrease in prepaid expensesDepreciationDecrease in inventory
(Click to select)Decrease in prepaid expensesIncrease in prepaid expensesDecrease in accounts payableDecrease in accounts receivableDecrease in inventoryGain on sale of investmentsIncrease in accounts payableDecrease in accrued liabilitiesIncrease in income taxes payableDepreciationIncrease in inventoryLoss on sale of equipment
(Click to select)Decrease in inventoryIncrease in inventoryIncrease in income taxes payableDecrease in prepaid expensesDecrease in accounts receivableDecrease in accrued liabilitiesGain on sale of investmentsLoss on sale of equipmentDecrease in accounts payableIncrease in accounts payableIncrease in prepaid expensesDepreciation
(Click to select)Increase in inventoryGain on sale of investmentsDepreciationDecrease in inventoryIncrease in income taxes payableLoss on sale of equipmentIncrease in accounts payableDecrease in accounts payableDecrease in prepaid expensesIncrease in prepaid expensesDecrease in accrued liabilitiesDecrease in accounts receivable
Net cash(Click to select)provided byused inoperating activities
Investing activities:
(Click to select)Increase in accounts receivableProceeds from sale of equipmentIncrease in accrued liabilitiesDecrease in accrued liabilitiesDecrease in accounts receivableIncrease in accounts payableIncrease in inventoryIncrease in prepaid expensesAdditions to plant and equipmentProceeds from sale of long-term investmentsDecrease in accounts payableDecrease in prepaid expenses
(Click to select)Proceeds from sale of long-term investmentsDecrease in accrued liabilitiesDecrease in accounts receivableIncrease in inventoryProceeds from sale of equipmentIncrease in prepaid expensesIncrease in accrued liabilitiesIncrease in accounts receivableIncrease in accounts payableAdditions to plant and equipmentDecrease in prepaid expensesDecrease in accounts payable
(Click to select)Increase in accrued liabilitiesIncrease in accounts payableDecrease in accounts receivableDecrease in prepaid expensesProceeds from sale of equipmentAdditions to plant and equipmentDecrease in accrued liabilitiesIncrease in inventoryDecrease in accounts payableProceeds from sale of long-term investmentsIncrease in prepaid expensesIncrease in accounts receivable
Net cash(Click to select)used inprovided byinvesting activities
Financing activities:
(Click to select)Decrease in accounts payableProceeds from sale of equipmentDecrease in common stockAdditions to plant and equipmentDecrease in prepaid expensesIncrease in accounts payableIncrease in inventoryDecrease in accounts receivableIncrease in accounts receivableIssuance of bonds payableCash dividendsDecrease in inventory
(Click to select)Increase in accounts receivableDecrease in prepaid expensesDecrease in accounts receivableDecrease in common stockIssuance of bonds payableDecrease in accounts payableDecrease in inventoryAdditions to plant and equipmentProceeds from sale of equipmentCash dividendsIncrease in accounts payableIncrease in inventory
(Click to select)Increase in accounts payableIncrease in inventoryCash dividendsDecrease in inventoryAdditions to plant and equipmentIncrease in accounts receivableProceeds from sale of equipmentDecrease in common stockDecrease in prepaid expensesDecrease in accounts receivableDecrease in accounts payableIssuance of bonds payable
Net cash(Click to select)used inprovided byfinancing activities
(Click to select)Net increase in cashNet decrease in cash
Cash balance, beginning of year
Cash balance, end of year		$

3.	Compute the free cash flow for 2011.(Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Free cash flow

$