Presented below is a condensed version of the comparative balance sheets for Zubin Mehta

(Preparation of a Statement of Cash Flows) Presented below is a condensed version of the comparative balance sheets for Zubin Mehta Corporation for the last two years at December 31.

2014             2013
Cash                                  $177,000                 $ 78,000
Accounts receivable            180,000                   185,000
Investments                         52,000                    74,000
Equipment                           298,000                   240,000
Accumulated depreciation—equipment (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 (not extraordinary) 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 2014 for Zubin Mehta Corporation.
(b) Determine Zubin Mehta Corporation’s free cash flow.

Here’s the SOLUTION

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