Statement of Cash Flows (Indirect Method) The Rural Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 are shown below: RURAL COMPANY Income Statement For the Year Ended December 31, 2013 Sales Revenue $756,000 Cost of Goods Sold $451,200 128,400 Depreciation Expense 24,000 33,600 Wages Expense Rent Expense Income Tax Expense 37.200 674.400 $81,600 Net Income RURAL COMPANY Balance Sheets Dec. 31, 2013 Dec. 31, 2012 Assets Cash Accounts Receivable Inventory Prepaid Rent Plant Assets Accumulated Depreciation Total Assets $44,400 $24,000 62,400 164,400 16,800 72,000 132,000 14,400 504,000 360,000 (150,000) (126,000) $518,000 $414,000 Liabilities and Stockholders' Equity Accounts Payable Wages Payable Income Tax Payable Common Stock Paid-in-capital in excess of par value $20,400 8,400 9,600 302,400 69,600 86,400 $414,000 $34,800 14,400 6,000 352,800 86,400 127,200 $518,000 Retained Earnings Total Liabilities and Stockholders' Equity Cash dividends of $40,800 were declared and paid during 2013. Plant assets were purchased for cash and additional common stock was issued for cash. Accounts payable relate to merchandise purchases. Required a. Calculate the change in cash that occurred during 2013. b. Prepare a statement of cash flows using the indirect method. c. Compute free cash flow. d. Compute the operating-cash-flow-to-current-liabilities ratio. Round to 2 decimal points e. Compute the operating-cash-flow-to-capital-expenditures ratio. Round to 2 decimal points a. Change in Cash during 2013 $ 20,400 / Decrease # Cash Flow from Operating Activities Net income $ 81,600 Add (deduct) items to convert net income to cash basis Depreciation 24,000 Decrease Accounts Receivable 9,600 Increase inventory (32,400) Increase Prepaid Rent (2.400) Increase Accounts Payable 14,400 Increase Wages Payable 6,000 Decrease Income Tax Payable (3,600) Cash Flow Provided by Operating Activities 97,200 Cash Flow from Investing Activities Purchase of Plant Assets (144,000) Cash Used by Investing Activities (144,000) Cash Flow from Financing Activities issuance of Common Stock 50,400X Payment of Dividends 0 Cash Provided by Financing Activities 0 in Cash Net Decrease 0 Cash at Beginning of Year 44,400 Cash at End of Year $24,000 C. Free cash flow $ 0 C. Free cash flow$ 0 0 d. Operating-cash-flow-to-current-liabilities ratio. o e. Operating-cash-flow-to-capital-expenditures ratio