Presented below are the financial statements of Rajesh Company.

Additional data:1. Dividends declared and paid were $25,000.2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.3. All depreciation expense, $14,500, is in the operating expenses.4. All sales and purchases are on account.Instructions(a) Prepare a statement of cash flows using the indirect method.(b) Compute free cash flow.

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RAJESH COMPANY Comparative Balance Sheets December 31 2011 Assets 2012 $ 35,000 33,000 $ 20,000 14.000 Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment 27,000 20,000 78.000 (24.000) 60,000 (29,000) $126,000 $108.000 Total Liabilities and Stockholders' Equity $ 29,000 $ 15,000 Accounts payable Income taxes payable Bonds payable Common stock 7,000 8,000 27,000 33.000 14.000 38,000 18,000 Retained earnings 45,000 Total $126,000 $108.000 RAJESH COMPANY Income Statement For the Year Ended December 31, 2012 Sales revenue $242.000 Cost of goods sold 175,000 Gross profit Operating expenses 67.000 24.000 Income from operations Interest expense 43.000 3.000 Income before income taxes 40.000 Income tax expense 8,000 $ 32.000 Net income