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Presented below are the financial statements of Sandhill Company Sandhill Company Comparative Balance Sheets December 31 2017 2016 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total $114,800 $65,600 65,600 45,920 91,840 65,600 196,800 255,840 (104,960) (78,720) $364,080 $354,240 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $62,320 $49,200 22,960 26,240 55,760 108,240 59,040 45,920 164,000 124,640 $364,080 $354,240 Sandhill Company Income Statement For the Year Ended December 31,2017 $793,760 574,000 219,760 Sales revenue Cost of goods sold Gross proft Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $59,040 19,680 78,720 141,040 9,840 131,200 26,240 104,960 Additional data: Depreciation expense was $57,400. Dividends declared and paid were $65,600. During the year equipment was sold for $27,880 cash. This equipment cost $59,040 originally and had accumulated depreciation of $31,160 at the time of sale. 1. 2. 3. Further analysis reveals the following. 1. Accounts payable pertain to merchandise suppliers. All operating expenses except for depreciation were paid in cash. All depreciation expense is in the selling expense category. All sales and purchases are on account. 2. 3. 4. Prepare a statement of cash flows for Sandhill Company using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a-sign eg.-15,000 or in parenthesis eg. (15,000).) Sandhill Company Statement of Cash Flows Compute free cash flow. (Show a negative free cash flow with either a-sign e.g. -15,000 or in parenthesis e.g.(15,000).) $ Free cash flow Cash Payments Cash Receipts from Customers @ii. Incepliii i3 1nxex; For Interest For Operating Expenses Issuance of Common Stock Payment of Dividends Redemption of Bonds Sale of Equipment To Suppliers