Presented below are the financial statements of Rajesh Company.

Rajesh Company
Comparative Statements of Financial Position
December 31

Rajesh Company
Income Statement
For the Year Ended December 31, 2014

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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Assets 2014 2013 £ 60,000 (29,000) 30,000 £ 78,000 (24,000) 20,000 14,000 Equipment Accumulated depreciation-equipment Inventory Accounts receivable 33,000 37,000 Cash 20,000 Total £131,000 £108,000 Equity and Liabilities Share capital-ordinary Retained earnings Bonds payable Accounts payable Income taxes payable £ 18,000 £ 14,000 50,000 38,000 33,000 15,000 8,000 27,000 29,000 7,000 £108,000 Total £131,000 £242,000 175,000 Sales revenue Cost of goods sold Gross profit Operating expenses 67,000 24,000 Income from operations Interest expense 43,000 3,000 Income before income taxes 40,000 8,000 Income tax expense Net income £ 32,000