Presented below are the financial statements of Johnston Company.

JOHNSTON COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue ................$286,000
Cost of goods sold .............. 204,000
Gross profit ................ 82,000
Operating expenses ............. 37,000
Income from operations ............ 45,000
Interest expense ............... 7,000
Income before income taxes ........... 38,000
Income tax expense ............. 10,000
Net income .................$ 28,000
Additional data:
1. Dividends of $23,000 were declared and paid.
2. During the year equipment was sold for $10,000 cash. This equipment cost $15,000 originally and had a book value of $10,000 at the time of sale.
3. All depreciation expense, $8,000, is in the operating expenses.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $7,000 cash.

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

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OHNSTON COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Equipment Less: Accumulated depreciation- 2014 24,000 25,000 41,000 2013 33,000 14,000 25,000 70,000 78,000 equipment (27,000 43,000 (24,000) 54,000 Total $133,000 126,000 Liabilities and Stockholders' Equit Accounts payable Income taxes payable Bonds payable Common stock Retained earnings 31,000 24,000 20,000 25,000 33,000 $133,000 43,000 20,000 10,000 25,000 28,000 $126,000 Total