The following are the financial statements of Nosker Company.

Nosker Company

Comparative Balance Sheet

December 31,

Assets 2017 2016

Cash $ 38,000. $ 20,000

Accounts receivable 30,000 14,000

Inventory 27,000 20,000

Equipment 60,000 78,000

Accumulated depreciation- equipment (29,000) (24,000)

Total $126,000 $108,000

Liabilities and Stockholders' Equity

Accounts payable $ 24,000 $ 15,000

Income taxes payable 7,000 8,000

Bonds payable 27,000 33,000

Common stock 18,000 14,000

Retained earnings 50,000 38,000

Total $126,000. $ 108,000

NOSKER COMPANY

INCOME STATEMENT

For the year Ended December 31, 2017

Sales revenue $242,000

Cost of goods sold 175,000

Gross Profit 67,000

Operating expenses 24,000

Income from operations 43,000

Interest expense. 3,000

Income before income taxes 40,000

Income tax expense 8,000

Net Income $32,000

Additional data:

1. Dividends declared and paid were $20,000

2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.

3. All depreciation expense, $14,500, is the operating expenses.

4. All sales and purchases are on account.

(a) Prepare a statement of cash flows using the indirect method.

(b) Compute free cash flow.