William Corporation€™s income statement for the year ended December 31, 2014, and its comparative balance sheets as of December 31, 2014 and 2013, follow.

During 2014, William engaged in these transactions:
a. Sold at a gain of $7,000 furniture and fixtures that cost $35,600, on which it had accumulated depreciation of $28,800.
b. Purchased furniture and fixtures in the amount of $39,600.
c. Paid a $20,000 note payable and borrowed $40,000 on a new note.
d. Converted bonds payable in the amount of $100,000 into 4,000 shares of common stock.
e. Declared and paid $6,000 in cash dividends.

Required
1. Using the indirect method, prepare a statement of cash flows for William. Include a supporting schedule of noncash investing transactions and financing transactions.
2. What are the primary reasons for William€™s large increase in cash from 2013 to 2014, despite its low net income?
3. Compute and assess cash flow yield and free cash flow for 2014. (Round to one decimal place.) Compare and contrast what these two performance measures tell you about William€™s cash-generatingability.

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William Corporationn Income Staterment For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses (including depreciation $1,609,000 1,127,800 481,200 expense of $46,800) Income from operations Other income (expenses) Gain on sale of furniture and fixtures Interest expense Income before income taxes Income taxes expense Net income 449400 31,800 7,000 (23,200) (16,200) $15,600 4,600 $11,000 William Corporation Comparative Balance Sheets December 31, 2014 and 2013 2014 2013 Assets 164,800 165,200 350,000 Cash Accounts receivable (net) Merchandise inventory Prepaid rent Furniture and fixtures Accumulated depreciation- furniture and fixtures Total assets 50,000 200,000 450,000 3,000 144,000 (24,000) $823,000 2,000 148,000 (42,000) $788,000 Liabilities and Stockholders' Equity Accounts payable Income taxes payab Notes payable (long-term) Bonds payable Common stock, $20 par value Additional paid-in capital Retained earnings Total liabilities and stockholders' equity $143,400 1400 40,000 100,000 240,000 181440 81,760 $788,000 $200,400 4,400 20,000 200,000 200,000 121,440 76,760 S823,000