$29.$ Operating Activities Section Using the Indirect Method and Cash Ratios. The following data are for Cycle Company.

December $31$

Current assets

Cash

Accounts receivable

Merchandise inventory

Prepaid expenses

Current liabilities

Accounts payable Income tax payable

$2012$

$\backslash$$ $80,000$

$18,000$

$15,500$

$4,200$

$35,400$

$1,400$

$2011$

$\backslash$$ $65,000$

$16,000$

$20,000$

$3,500$

$36,600$

$1,900$

Other Data

for the Year Ended December $31,2012$

Net income

Depreciation expense

Loss on sale of equipment

Capital expenditures

From accounting records

Required:

a$.$ Using the indirect method, prepare the operating activities section of the statement of cash flows for Cycle Company for the year ended December $31,2012.$ Use the format presented in Figure $12\mathrm{.}5$ "Operating Activities Section of Statement of Cash Flows $($Home Store, Inc.$)".$

b$.$ Calculate the following cash measures:

$1.$ Operating cash flow ratio

$2.$ Capital expenditure ratio

$3.$ Free cash flow