Presented below and on the next page are the ?nancial 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 pro? t 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. Instructions
a) Prepare a statement of cash ?ows using the indirect method?
b) Compute free cash ?ow?