Presented below are the financial statements of Rajesh Company.
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Rajesh Company
Comparative Balance Sheets December 31 |
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Assets
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2014
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2013
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| Cash |
$37,000
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$20,000
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| Accounts receivable |
33,000
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14,000
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| Inventory |
30,000
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20,000
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| Equipment |
60,000
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78,000
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| Accumulated depreciation—equipment |
(29,000
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)
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(24,000
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)
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| Total |
$131,000
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$108,000
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Liabilities and Stockholders’ Equity
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| Accounts payable |
$29,000
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$ 15,000
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| Income taxes payable |
7,000
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8,000
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| Bonds payable |
27,000
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33,000
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| Common stock |
18,000
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14,000
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| Retained earnings |
50,000
|
38,000
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| Total |
$131,000
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$108,000
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Rajesh Company
Income Statement For the Year Ended December 31, 2014 |
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| Sales revenue |
$242,000
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| Cost of goods sold |
175,000
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| Gross profit |
67,000
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| Operating expenses |
24,000
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| Income from operations |
43,000
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| Interest expense |
3,000
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| Income before income taxes |
40,000
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| Income tax expense |
8,000
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| Net income |
$32,000
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Additional data:
| 1. | Depreciation expense is 13,300. | |
| 2. | Dividends declared and paid were $20,000. | |
| 3. | During the year equipment was sold for $9,700 cash. This equipment cost $18,000 originally and had accumulated depreciation of $8,300 at the time of sale. |
(a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)
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RAJESH COMPANY
Statement of Cash Flows For the Year Ended December 31, 2014 |
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$
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$
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$
[removed] |
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(b) Compute free cash flow.
| Free cash flow |
$
[removed] |
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