this exercise will provide you with an opportunity to prepare a statement of cash fl 610970

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This exercise will provide you with an opportunity to prepare a statement of cash flows. A comparative balance sheet for Hernan Perez Pictures appears below:

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Assets	2014	2013	Change
Cash	$81,000	$35,000	$46,000
Accounts receivable	65000	50000	15000
Inventory	155,000	96,000	59,000
Investments	100.000	70.000	30.000
Equipment	170.000	100.000	70.000
Accumulated depreciation	(31,000)	(20,000)	(11,000)
	$540.000	$331.000	$209.000
Liabilities and Stockholders” Equity
Accounts payable	$31,000	$40,000	$(9,000)
Long-term note payable	12,00U	bU,000	12,000
Bonds payable	100,000	0	100,000
Common stock, no par	250,000	200,000	50,000
Retained earnings	87.000	31.000	56.000
	$540.000	$331.000	$209.000

Additional information:

New equipment costing $80,000 was purchased for cash.
Old equipment was sold at a loss of $4,500.
Bonds were issued for cash.
An investment costing $30,000 was acquired by issuing a long-term note payable.
Cash dividends of $14,000 were declared and paid during the year.
Depreciation expense for 2014 was $15,000.
Accounts Payable relate to operating expenses.
Stock investments are classified as available-for-sale securities.
Net sales for 2014 were $80,000.

Instructions

(a) Prepare a statement of cash flows for 2014 using the indirect method.

(b) Compute the amount of free cash flow for 2014.

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