Presented below are the financial statements of rajesh

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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).)

(b) Compute free cash flow.

Free cash flow  
$[removed]