Data for Nosker Company are presented in P17-7A. Further analysis reveals the following.

1. Accounts payable pertain to merchandise suppliers.

2. All operating expenses except for depreciation were paid in cash.

Instructions

(a) Prepare a statement of cash flows for Nosker Company using the direct method.

(b) Compute free cash flow.

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NOSKER COMPANY Comparative Balance Sheets December 31 Assets 2017 2016 $ 38,000 30,000 $ 20,000 Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment 14,000 20,000 78,000 (24,000) 27,000 60,000 (29,000) Total $126,000 $108,000 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable $ 24,000 7,000 27,000 18,000 50,000 $ 15,000 8,000 33,000 14,000 38,000 Common stock Retained earnings Total $126,000 $108,000