Presented below are the financial statements of Rajesh Company. Rajesh Company Comparative Balance S

Presented below are the financial statements of Rajesh Company.

Rajesh Company
Comparative Balance Sheets
December 31
Assets
 
2014
 
2013
Cash  
$37,000
   
$20,000
 
Accounts receivable  
33,000
   
14,000
 
Inventory  
30,000
   
20,000
 
Equipment  
60,000
   
78,000
 
Accumulated depreciation—equipment  
(29,000
)
 
(24,000
)
   Total  
$131,000
   
$108,000
 
             
Liabilities and Stockholders’ Equity
           
Accounts payable  
$29,000
   
$ 15,000
 
Income taxes payable  
7,000
   
8,000
 
Bonds payable  
27,000
   
33,000
 
Common stock  
18,000
   
14,000
 
Retained earnings  
50,000
   
38,000
 
   Total  
$131,000
   
$108,000
 

 

Rajesh Company
Income Statement
For the Year Ended December 31, 2014
Sales revenue  
$242,000
Cost of goods sold  
175,000
Gross profit  
67,000
Operating expenses  
24,000
Income from operations  
43,000
Interest expense  
3,000
Income before income taxes  
40,000
Income tax expense  
8,000
Net income  
$32,000

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).)

RAJESH COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
   
 
$
   
$
 
   
 
   
 
 
 
 
$
[removed]

(b) Compute free cash flow.

Free cash flow  
$
[removed]

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