The three accounts shown below appear in the general ledger of Herrick Corp. during 2017.EquipmentDate Debit Credit BalanceJan. 1 Balance 160,000July 31 Purchase of equipment 70,000 230,000Sept.2 Cost of equipment constructed 53,000 283,000Nov. 10 Cost of equipment sold 49,000 234,000Accumulated Depreciation—EquipmentDate Debit Credit BalanceJan. 1 Balance 71,000Nov. 10 Accumulated depreciation 30,000 41,000 on equipment soldDec. 31 Depreciation for year 28,000 69,000Retained EarningsDate Debit Credit BalanceJan. 1 Balance 105,000Aug. 23 Dividends (cash) 14,000 91,000Dec. 31 Net income 77,000 168,000Instructions:1. From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $7,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)2. Prepare statement of cash flows and compute free cash flow.