Prepare a Statement of Cash Flows, Indirect Method; Analyze Using Cash Ratios. Nolan Company's most recent balance sheet, income

statement, and other important information for 2012 are presented as follows

Additional data for 2020 are as follows:

Sold equipment with a book value of $13,000 (= $27,000 cost - $14,000 accumulated depreciation) for $21,000 cash

Purchased equipment for $10,000 cash

Sold long-term investments for $6,000 cash and these investments had an original cost of $8,000

Received $19,000 cash related to notes payable

Issued common stock for $35,000 cash

o Declared and paid $4,000 in cash dividends

Required:

1. Use the four steps described in the chapter to prepare a statement of cash flows for the year ended December 31, 2020, using the indirect

method. Refer to the format presented in Figure 6.7 "Statement of Cash Flows (Home Store, Inc.)".

2. The owner of Nolan Company wants to know how cash more than doubled, from $82,000 to $165,000, given the company's modest net

income of $9,000. Use the information in the statement of cash flows to briefly explain why cash more than doubled.

3. Calculate the following cash measures:

1. Operating cash flow ratio

2. Capital expenditure ratio (Hint: Capital expenditures can be found in the investing activities section of the statement of cash flows prepared

in part a.)

3. Free cash flow

Nolan Company Balance Sheet December 31,2020 and December 31, 2019 Assets Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses Noncurrent assets Property, plant, and equipmenterion Accumulated depreciation Long-tem investments Total assets Labilities and owners' equity Current liabilities Accounts payable Income tax payable Noncurrent liabilities Bonds payable Owners'equity Common stock Retained eamings Total liabilities and owners' equity 2019582,00051,00090,0008,000172,000(29,000)5403,00029,000