Reference no: EM132547786

The following are the financial statements of Sheffield Corp..

Sheffield Corp. Comparative Balance Sheets

December 31

Assets

                                                   2020                             2019

Cash                               $37,400                      $19,100

Accounts receivable             32,000                          19,700

Inventory                              29,600                   20,100

Equipment                              59,600                    78,000

Accumulated depreciation-equipment (29,600)         (23,500)

Total                                        $129,000                  $113,400

Liabilities and Stockholders' Equity

Accounts payable                         $28,100                   $16,000

Income taxes payable                        7,000                  8,100

Bonds payable                                 27,400                 32,200

Common stock                                   18,300                13,300

Retained earnings                             48,200               43,800

Total                                                $129,000             $113,400

Sheffield Corp.

Income Statement

For the Year Ended December 31, 2020

Sales revenue$242,400

Cost of goods sold176,800

Gross profit65,600

Operating expenses23,400

Income from operations42,200

Interest expense3,000

Income before income taxes39,200

Income tax expense9,000

Net income$30,200

Additional data:

1. Dividends declared and paid were $25,800.

2. During the year, equipment was sold for $9,800 cash. This equipment cost $18,400 originally and had a book value of $9,800 at the time of sale.

3. All depreciation expense, $14,700, is in the operating expenses.

4. All sales and purchases are on account.

Question 1: Prepare statement of cash flows using the indirect method.

Question 2: Compute free cash flow.