Waterways Continuing Problem 13 (Indirect Method) Waterways prepared the balance sheet and income statement for the irrigation installation division for 2016. Now the company also needs to prepare a cash flow statement for the same division. The comparative balance sheets for Waterways Corporations Irrigation Installation Division for the years 2015 and 2016 and the income statement for the year 2016 are presented below. Additional information: 1. Waterways sold a company vehicle for $24,000. The vehicle had been used for 10 years. It cost $80,000 when purchased and had a 10-year life and a $6,000 salvage value. Straight-line depreciation was used. 2. Waterways purchased with cash new equipment costing $209,200. 3. Prepaid expenses increased by $33,960. WATERWAYS CORPORATIONINSTALLATION DIVISION Balance Sheets December 31 Assets 2016 2015 Current assets Cash $836,797 $746,681 Accounts receivable 680,750 542,685 Work in process 702,159 Inventory 16,766 7,500 Prepaid expenses 76,550 42,590 Total current assets 2,313,022 1,339,456 Property, plant, and equipment Land 300,000 300,000 Buildings 450,000 450,000 Equipment 929,400 800,200 Furnishings 40,416 40,416 Accumulated depreciation (482,523 ) (485,204 ) Total property, plant, and equipment 1,237,293 1,105,412 Total assets $3,550,315 $2,444,868 Liabilities and Stockholders Equity Current liabilities Accounts payable $157,095 $128,360 Income taxes payable 101,344 79,989 Wages payable 4,517 1,984 Interest payable 1,187 Other current liabilities 14,515 15,246 Revolving bank loan payable 15,000 Total current liabilities 293,658 225,579 Long-term liabilities Note payable 140,000 Total liabilities 433,658 225,579 Stockholders equity Common stock 1,250,000 1,250,000 Retained earnings 1,866,657 969,289 Total stockholders equity 3,116,657 2,219,289 Total liabilities and stockholders equity $3,550,315 $2,444,868 WATERWAYS CORPORATIONINSTALLATION DIVISION Income Statement For the Year Ending December 31, 2016 Sales $5,536,077 Less: Cost of goods sold 3,132,777 Gross profit 2,403,300 Operating expenses Advertising $50,000 Insurance 400,000 Salaries and wages 584,640 Depreciation 71,319 Other operating expenses 21,200 Total operating expenses 1,127,159 Income from operations 1,276,141 Other income Gain on sale of equipment 18,000 Other expenses Interest expense (12,187 ) Net other income and expenses 5,813 Income before income tax 1,281,954 Income tax expense 384,586 Net income $897,368 (a) Prepare a statement of cash flows using the indirect method for the year 2016. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) WATERWAYS CORPORATIONInstallation Division Statement of Cash FlowsIndirect Method For the Year Ended December 31, 2016 $ Adjustments to reconcile net income to $ $ (c) Determine free cash flow for the year 2016. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Free cash flow $