A comparative balance sheet for Shabbona Corporation is presented below.

Additional information:
1. Net income for 2014 was $125,000. No gains or losses were recorded in 2014.
2. Cash dividends of $60,000 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

Instructions
(a) Prepare a statement of cash flows for 2014 for Shabbona Corporation.
(b) Determine Shabbona Corporation’s current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financialflexibility.

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December 31 2014 73,000 82,000 180,000 71,000 260,000 (69,000) $597,000 Assets Cash 2013 Inventory Land Equipment Accumulated depreciation-equipment $ 22,000 66,000 189,000 110,000 200,000 (42,000) $545,000 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings 34,000 150,000 214,000 199,000 $597,000 $47,000 200,000 164,000 134,000 $545,000 Total