The comparative statement of financial position for Down Under Inc. at December 31, 2020 and additional information for the year ended December 31, 2020 are presented below: Down Under Inc. Statement of Financial Position December 31 2020 2019 Assets Cash Accounts receivable Inventory Prepaid expenses FV-OCl investments Equipment Accumulated depreciation Total assets $65,800 75,100 112,100 8,500 147,000 226,000 (53,000) $581,500 $61,300 72,200 124,600 9,000 145,000 205,000 (48,000) $569,100 Liabilities and Shareholders' Equity Accounts payable Income tax payable Dividends payable Long-term notes payable Common shares Retained earnings Accumulated other comprehensive income Total liabilities and shareholders' equity $74,300 8,000 8,000 121,000 50,000 312,200 8,000 $581,500 $71,400 9,000 7,000 115,000 40,000 318,700 8,000 $569,100 Additional Information: 1. 2. 3. The company reported net income of $ 61,800 for the year ended December 31, 2020. Equipment costing $40,000, with a carrying value of $28,000 was sold for $26,000. New equipment was acquired during the year for cash and by issuing common shares. No common shares were issued for other than the acquisition of additional equipment. Depreciation was included in operating expenses to arrive at the net income. Additional FV-OCl investments were purchased for cash during the year. $12,000 of long term notes payable were retired during the year. The company declared cash dividends during the year. 4. 5. 6. 7. 4 Question 3 (continued) Required: 1. Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method. 2. Calculate the company's free cash flow for December 31, 2020 and comment on the financial flexibility of Down Under Inc