The following are the financial statements of Gil Company.

GIL COMPANY
Income Statement
For the Year Ended December 31, 2017
Sales........................................................$242,000
Cost of goods sold.......................................175,000
Gross profit.................................................67,000
Operating expenses........................................24,000
Income from operations...................................43,000
Interest expense.............................................3,000
Income before income taxes..............................40,000
Income tax expense.........................................8,000
Profit......................................................$ 32,000
Additional information:
1. Dividends declared and paid were $20,000. Gil reports under ASPE.
2. During the year, equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a carrying value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.
Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Calculate free cash flow.
TAKING IT FURTHER
Gil Company had a positive cash balance at the beginning and end of 2017. Given that, is it possible that the company could have had a negative cash balance at one or more points during the year? Explain.

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GIL COMPANY Balance Sheet December 31 Assets Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment Total 2017 2016 38,000 30,000 27,000 60,000 (29,000) 126,000 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 Liabilities and Shareholders' Equity Accounts payable Income taxes payable Notes payable Common shares Retained earnings Total $24,000 7,000 27,000 18,000 50,000 $126,000 $15,000 8,000 33,000 14,000 38,000 $108,000