Chaplin Arts, Inc.€™s comparative balance sheets for December 31, 2014 and 2013 follow.

The following additional information about Chaplin Arts€™s operations during 2013 is available:
(a) Net income, $28,000;
(b) Building and equipment depreciation expense amounts, $15,000 and $3,000, respectively;
(c) Equipment that cost $13,500 with accumulated depreciation of $12,500 sold at a gain of $5,300;
(d) Equipment purchases, $12,500;
(e) Patent amortization, $3,000; purchase of patent, $1,000;
(f) Funds borrowed by issuing notes payable, $25,000; notes payable repaid, $15,000;
(g) Land and building purchased for $162,000 by signing a mortgage for the total cost;
(h) 1,500 shares of $20 par value common stock issued for a total of $50,000;
(i) Paid cash dividends, $9,000.

Required
1. Using the indirect method, prepare a statement of cash flows for Chaplin Arts.
2. Why did Chaplin Arts have an increase in cash of $67,200 when it recorded net income of only $28,000? Discuss and interpret.
3. Compute and assess cash flow yield and free cash flow for 2014. (Round to one decimal place.) What is your assessment of Chaplin Arts€™ cash-generatingability?

Chaplin Arts, Inc. Comparative Balance Sheets December 31, 2014 and 2013 2014 2013 Assets S 94,560 102,430 112,890 27,360 75,430 137,890 20,000 Cash Accounts receivable (net) Prepaid expenses Land Building Accumulated depreciation-building Equipment Accumulated depreciation- equipment Patents Total assets 25,000 137,000 (15,000) 33,000 (14,500) 4,000 S479,380 34,000 (24,000) 6,000 $276,680 Liabilities and Stockholders' Equity S10,750 10,000 Accounts payable Notes payable (current) Accrued liabilities Mortgage payable Common stock, $10 par value Additional paid-in capital Retained earnings Total liabilities and stockholders equity 36,750 12,300 162,000 180,000 57,200 59,430 $479,380 150,000 37,200 40,430 $276,680