preparation of a statement of cash flows a comparative balance sheet for shabbona c 1574514

(Preparation of a Statement of Cash Flows) A comparative balance sheet for Shabbona Corporation is presented below.

Additional information:

1. Net income for 2014 was $125,000. No gains or losses were recorded in 2014.

2. Cash dividends of $60,000 were declared and paid.

3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

Instructions

(a) Prepare a statement of cash flows for 2014 for Shabbona Corporation.

(b) Determine Shabbona Corporation’s current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financial flexibility.