A comparative balance sheet for Harrison Corporation is presented below.

Additional information:
Cash dividends of $30,000 were declared and paid.
Bonds payable of $25,000 were converted to common stock.

Instructions
(a) Prepare a statement of cash flows for 2014.
(b) Compute the current ratio (current assets ÷ current liabilities) as of December 31, 2013 and 2014 and compute free cash flow for the year 2014.
(c) In light of the analysis in (b), comment on Harrison€™s liquidity and financialflexibility.

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HARRISON CORPORATION BALANCE SHEETS December 31 2014 Assets Cash Accounts receivable Inventory Building 2013 Inc/Dec $36,500 41,000 90,000 130,000 Accumulated depreciation-building (34,500) 35,500 $298,500 $11,000 25,500 Inc 33,000 94,500 8,000 Inc 4,500 Dec. 30,000 Inc 100,000 (21,000 13,500 Inc. 55,000 Land 19,500 Dec Total $272,500 Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings 17,000 75,000 107,000 99,500 $ 298,500 23,500 100,000 82,000 67,000 $272,500 6,500 Dec. 25,000 Dec. 25,000 Inc 32,500 Inc. Total