The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2014 appear below.

Net income of $44,000 was reported, and dividends of $33,000 were paid in 2014. New equipment was purchased and none was sold.

Instructions
(a) Prepare a statement of cash flows for the year 2014.
(b) Compute the current ratio (current assets ÷ current liabilities) as of January 1, 2014, and December 31, 2014, and compute free cash flow for the year 2014.
(c) In light of the analysis in (b), comment on Madrasah’s liquidity and financialflexibility.

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MADRASAH CORPORATION BALANCE SHEETS Dec. 31, 2014 Assets Cash Accounts receivable Equipment Less: Accumulated depreciation-equipment Jan. 1, 2014 Inc./De 20,000 106,000 39,000 17,000 $148,000 $ 13,000 88,000 22,000 11.000 $112,000 $ 7,000 Inc. 18,000 Inc. 17,000 Inc. 6,000 Inc. Total Liabilities and Stockholders Equit Accounts payable Common stock Retained earnings 20,000 100,000 28,000 $148,000 $ 15,000 80,000 17,000 $112,000 5,000 Inc. 20,000 Inc. 11,000 Inc. Total