Presented below and on the next page are the financial statements of Rajesh Company.

& Rajesh Company Comparative Balance Sheets i December 31 Prepare a statement of cash flows—indirect method, and Assets = 20148 _ 2013 —

compute free cash flow. Cash Ses7-000 $ 20,000

(LO 3, 4) Accounts receivable 33,000 14,000 Inventory 30,000 20,000

| XLS | 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.
Instructions

(a) Prepare a statement of cash flows using the indirect method.

(a) Cash from operations

(b) Compute free cash flow. $29,300