The comparative balance sheet of Morgensen Educational Supply at December 31, 2015, reported the following: Morgensens transactions

The comparative balance sheet of Morgensen Educational Supply at December 31, 2015, reported the following:

Morgensen’s transactions during 2015 included the following:

Requirements
1. Prepare the statement of cash flows of Morgensen Educational Supply for the year ended December 31, 2015. Use the indirect method to report cash flows from operating activities.
2. Evaluate Morgensen’s cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.
3. If Morgensen plans similar activity for 2016, what is its expected free cashflow?

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2015 2014 Current Assets: Cash Accounts Recetvable Merchandise Inventory 24,500 21,900 60,000 $ 89,600 14,500 62,800 Current Liabilities: Accounts Payable Accrued Liabilities 30,100 27,600 11,100 11,600 17,300 Payment of cash dividends Purchase of equipment with cash Issuance of ong-term note payable to borrow cash Issuance of common stock for cash 14,200 Depreciation expense 55,200 Purchase of building with cash 103,000 45,000 Net income 57,600 111,000