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Presented below are the financial statements of rajesh
Presented below are the financial statements of Rajesh Company.
|
Rajesh Company |
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|
Assets |
2014 |
2013 |
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| Cash |
$37,000 |
$20,000 |
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| Accounts receivable |
33,000 |
14,000 |
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| Inventory |
30,000 |
20,000 |
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| Equipment |
60,000 |
78,000 |
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| Accumulated depreciation—equipment |
(29,000 |
) |
(24,000 |
) |
||
| Total |
$131,000 |
$108,000 |
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|
Liabilities and Stockholders’ Equity |
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| Accounts payable |
$29,000 |
$ 15,000 |
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| Income taxes payable |
7,000 |
8,000 |
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| Bonds payable |
27,000 |
33,000 |
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| Common stock |
18,000 |
14,000 |
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| Retained earnings |
50,000 |
38,000 |
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| Total |
$131,000 |
$108,000 |
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|
Rajesh Company |
||
| 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).)
(b) Compute free cash flow.
| Free cash flow |
$
 [removed] |