Solution-Prepare a statement of cash flows using the

Prepare a statement of cash flows using the indirect method

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Reference no: EM132004072

Problem - 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.

(b) Compute free cash flow.

Reference no: EM132004072

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Prepare a statement of cash flows using the indirect method

Reference no: EM132004072

Reference no: EM132004072

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