The comparative balance sheet of Morris Educational Supply at December 31, 2016, reported the following:

Morris€™s transactions during 2016 included the following:

Requirements
1. Prepare the statement of cash flows of Morris Educational Supply for the year ended December 31, 2016. Use the indirect method to report cash flows from operating activities.
2. Evaluate Morris€™s cash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.
3. If Morris plans similar activity for 2017, what is its expected free cash flow?

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2016 2015 Current Assets: Cash Accounts Receivable Merchandise Inventory S 90,600 22,500 21,600 58,600 15,100 63,800 Current Liabilities Accounts Payable Accrued Liabilities 5 30,600 29,100 11,800 10,500 17,200 55,000 50,000 108,000 Depreciation expense Payment of cash dividends Purchase of equipment with cash Issuance of long-term notes payable to borrow cash Issuance of common stock for cash $ 17,200 101,000 64,600 Purchase of building with cash Net income