Presented below are the financial statements of Rajesh Company Ltd.

RAJESH COMPANY LTD.
Income Statement
For the Year Ended December 31, 2017
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.
Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute free cash flow.

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RAJESH COMPANY LTD Comparative Statements of Financial Position December 31 Assets Equipment Accumulated depreciation-equipment Inventory Accounts receivable Cash 2017 2016 E 60,000 (29,000) 30,000 33,000 37,000 £131,000 £ 78,000 (24,000) 20,000 14,000 20,000 £108,000 Total Equity and Liabilities Share capital-ordinary Retained earnings Bonds payable Accounts payable Income taxes payable £ 18,000 50,000 27,000 29,000 7,000 £131,000 £ 14,000 38,000 33,000 15,000 8,000 £108,000 Total