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Problem II (22 points) LUCAS COMPANY Comparative Balance Sheet Dec. 31, 2020 Dec. 31, 2019 Assets Cash. Accounts receivable.. Inventory............ Prepaid expenses.......................................... Equipment....... Accumulated depreciation Equipment........... Total assets... $54,000 6,000 11,000 2,000 20,000 (3,000) $90,000 $12,000 8,000 7,000 3,000 20,000 (2,000) $48,000 Liabilities and Stockholders' Equity ....... Accounts payable............ Long-term note payable.............................. Common stock........... Retained earnings. Total liabilities and stockholders' equity................ $ 1,000 13,000 33,000 43,000 $90,000 $ 4,000 14,000 18,000 12,000 $48,000 The income statement for the year is as follows: $280,000 LUCAS COMPANY Income Statement For the Year Ended December 31, 2020 Sales (all on credit)............ Expenses and losses Cost of goods sold..... ....... $184,000 Operating expenses, exclusive of depreciation............ 42,300 Depreciation expense.... 1,000 Interest expense...... 1,200 Loss on disposal of land................... 2,500 Income taxes............. 9,000 Total expenses and loss......... Net income... 240,000 $ 40,000 Cash dividends of $9,000 were paid during the year. Land costing $15,000 was acquired by the issuance of common stock. The property was subsequently sold for $12,500 cash. Instructions: 1. Prepare a statement of cash flows for the year ended December 31, 2020 using the indirect method. (17 pts.) Open Statement of Cash Flow Word Document use it to complete the problem, and copy and paste it in the space provided, or email it to me when you submit the exam. OR Open the PDF document print it, and complete the problem, and email it to me when you submit the exam. 2. At the bottom of your statement, please calculate free cash flow. (5 pts.)

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