P13-7A Prepare a statement of cash flows - indirect method, and compute free cash flow.

NOSKER COMPANY

Comparative Balance Sheet

December 31

2017

2016

Assets

Cash

$38,000

$20,000

Accounts Receivable

30,000

14,000

Inventory

27,000

20,000

Equipment

60,000

78,000

Accumulated depreciation--equipment

(29,000)

(24,000)

Total

$126,000

$108,000

Liabilities and Stockholders' Equity

Accounts payable

$24,000

$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

$126,000

$108,000

NOSKER COMPANY

Income Statement

For the Year ended December 31, 2 017

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. Dividends declared and paid were $20,000.

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.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

After you have completed the requirements of P13-7A, consider the additional question.
Answers are on the other tab in this file.
1.	Assume that depreciation changed to $17,500 and the asset was sold for $11,500 cash. Also assume that the
	book value of the asset at the time of sale was also $11,500. Show the impact of these changes on the
	statement of cash flows and free cash flow.