Data for Johnston Company are presented in P17-7B. Further analysis reveals the following.

1. Accounts payable pertains to merchandise creditors.

2. All operating expenses except for depreciation are paid in cash.

Presented below are the financial statements of Nosker Company.

NOSKER COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue ..............$242,000
Cost of goods sold .............. 175,000
Gross profit ................ 67,000
Operating expenses ............. 24,000
Income from operations .......... 43,000
Interest expense ............. 3,000
Income before income taxes ........ 40,000
Income tax expense ............ 8,000
Net income ................$ 32,000

Instructions
(a) Prepare a statement of cash flows using the direct method.
(b) Compute free cashflow.

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NOSKER COMPANY Comparative Balance Sheets December 31 2014 Assets Cash Accounts receivable Inventory Equipment Accumulated depreciation equipment 2013 $ 38,000 30,000 27,000 60,000 (29,000) $126,000 S 20,000 14,000 20,000 78,000 (24,000) $108,000 Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings 24,000 7,000 27,000 18,000 50,000 S126,000 $15,000 8,000 33,000 14,000 38,000 $108,000 Total