Presented below are the financial statements of Gaudette Company.

Additional information:
1. Dividends of $33,000 were declared and paid. Gaudette reports under ASPE.
2. During the year, equipment was sold for $10,000 cash. This equipment cost $13,000 originally and had a carrying value of $10,000 at the time of sale.
3. All depreciation expense, $6,000, is in the selling expense category.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $5,000 cash.
Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Calculate free cash flow.
TAKING IT FURTHER
Gaudette 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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GAUDETTE COMPANY Balance Sheet December 31 2017 28,000 23,000 41,000 70,000 (27,000) 2016 $ 33,000 14,000 Accounts receivable Inventory Equipment Accumulated depreciation-equipment Total Liabilities and Shareholders' 78,000 (24,000) $126,000 $135,000 Accounts payable Income taxes payable Notes payable Common shares Retained earnings Total 31,000 26,000 20,000 25,000 33,000 $135,000 $ 43,000 20,000 10,000 25,000 28,000 $126,000 GAUDETTE COMPANY Income Statement For the Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Profit from operations Interest expense Profit before income taxes Income tax expense Profit $286,000 194,000 92,000 $28,000 9,000 37,000 55,000 7,000 48,000 10,000 38,000