17-8A Prepare a statement of cash flows - direct method, and compute free cash flow. NOSKER COMPANY Comparative Balance Sheet December 31 Assets 2017 2016 Cash $38,000 $20,000 Accounts Receivable 30,000 14,000 Inventory 27,000 20,000 Equipment 60,000 78,000 Accumulated depreciation--equipment (29,000) (24,000) Total $126,000 $108,000 Liabilities and Stockholders' Equity Accounts payable $24,000 $15,000 Income taxes payable 7,000 8,000 Bonds payable 27,000 33,000 Common stock 18,000 14,000 Retained earnings 50,000 38,000 Total $126,000 $108,000 NOSKER COMPANY Income Statement For the Year ended December 31, 2017 Sales revenue $242,000 Cost of goods sold 175,000 Gross profit 67,000 Operating expenses 24,000 Income from operations 43,000 Interest expense 3,000 Income before income taxes 40,000 Income tax expense 8,000 Net income $32,000 Additional data: 1. Dividends declared and paid were $20,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. Data for Nosker Company is presented above. Further anlaysis reveals the following. 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. Instructions (a) Preapare a statement of cash flows using the direct method. (b) Compute free cash flow. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) NOSKER COMPANY Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Cash receipts from customers Value Less cash payments: To suppliers For operating expenses Value For income taxes Value For interest Value ? Net cash provided by operating activities ? Cash flows from investing activities Sale of equipment Value Net cash provided by investing activities Value Cash flows from financing activities Issuance of common stock Value Redemption of bonds Value Payment of dividends Value Net cash used by financing activities ? Net increase in cash ? Cash at beginning of period Value Cash at end of period ? (b) Free Cash Flow: Net cash provided by operating activities Value Less: Capital expenditures Value Cash dividends Value ? Free Cash Flow Value After you have completed the requirements of P17-8A, consider the additional question. Answers are on the other tab in this file. 1. Assume that the 2017 balances for accounts receivable, inventory, and accounts payable changed to $26,000, $30,000, and $23,000 respectively. Dividends declared and paid also changed to $28,000. Show the impact on the statement of cash flows and free cash flow.