Presented below is a condensed version of the comparative balance sheets for Zubin Mehta Corporation for the last two years at December 31.

	2017	2016
Cash	\(177,000	\)78,000
Accounts receivables	180,000	185,000
Investment	52,000	74,000
Equipment	298,000	240,000
Accumulated depreciation	(106,000)	(89,000)
Current liabilities	134,000	151,000
Common stock	160,000	160,000
Retained earnings	307,000	177,000

Additional information:

Investments were sold at a loss of \(10,000; no equipment was sold; cash dividends paid were \)30,000; and net income was $160,000.

Instructions

(a) Prepare a statement of cash flows for 2017 for Zubin Mehta Corporation.

(b) Determine Zubin Mehta Corporation’s free cash flow.

Particular

Amount $

Amount $

Cash flow from operations

Net income

$160,000

Add or less: Adjustments to net income

Depreciation expenses

17,000

Loss on sale of investment

10,000

Decrease in accounts receivables

5,000

Decrease in current liabilities

(17,000)

Cash flow from operations

$175,000

Cash flow from investing activities

Sale of investment

12,000

Purchase of equipment

(58,000)

Cash flow used in investing activity

(46,000)

Cash flow from financing activities

0

Cash dividend

(30,000)

Cash flow used in financing activities

(30,000)

Net increase or decrease in cash

99,000

Add: Opening cash Balance

78,000

Ending Cash Balance

$177,000

Particular

Amount $

Cash flow from operations

$175,000

Less: Capital expenditure

(58,000)

Less: Dividend

(30,000)

Free Cash Flow

$87,000