A comparative balance sheet for Shabbona Corporation is presented below.

Additional information:
1. Net income for 2014 was $125,000. No gains or losses were recorded in 2014.
2. Cash dividends of $60,000 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

Instructions
(a) Prepare a statement of cash flows for 2014 for Shabbona Corporation.
(b) Determine Shabbona Corporation’s current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financialflexibility.

December 31 2014 73,000 82,000 180,000 71,000 260,000 (69,000) $597,000 Assets Cash 2013 Inventory Land Equipment Accumulated depreciation-equipment $ 22,000 66,000 189,000 110,000 200,000 (42,000) $545,000 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings 34,000 150,000 214,000 199,000 $597,000 $47,000 200,000 164,000 134,000 $545,000 Total