ROCASTLE ple Comparative Statements of Financial Position December 31 2017 € 43,000 45,000 25,000 18,000 €131,000 € 25,000 31,000 20,000 31,000 24,000 €131,000. Assets Equipment Accumulated depreciation- equipment Inventory Accounts receivable Cash Total Equity and Liabilities Share capital-ordinary Retained earnings Bonds payable Accounts payable Income taxes payable Total €286,000 Sales revenue 204,000 Cost of goods sold 82,000 Gross profit 37,000 Operating expenses Income from operations 45,000 Interest expense 7,000 Income before income taxes 38,000 10,000 Income tax expense Net income. € 28,000 Additional data(these data are helpful for applying indirect-method): 1. Depreciation expense was €6,000. 2. Dividends of €25,000 were declared and paid. 3. During the year, equipment was sold for €12,000 cash. This equipment cost €15,000 originally and had accumul depreciation of €3,000 at the time of sale. 4. Additional equipment was purchased for €7,000 cash. Further analysis reveals the following (these data are helpful for applying direct-method). 1. Accounts payable pertains to merchandise creditors. 2. All operating expenses except for depreciation are paid in cash. 3. All depreciation expense is in the operating expenses. 4. All sales and purchases are on account. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Prepare a statement of cash flows using the direct method. (c) Compute free cash flow. € 70,000 (27,000) ROCASTLE ple Income Statement For the Year Ended December 31, 2017 2016 € 54,000 25,000 14,000 33,000 €126,000 € 25,000 28,000 10,000 43,000 20,000 €126,000 € 78,000 (24,000)