Question
prepare a statement of cash flows--indirect method Presented below are the financial statements of Warner Company. WARNER COMPANY Comparative Balance Sheet December 31 Assets 2023
prepare a statement of cash flows--indirect method
Presented below are the financial statements of Warner Company.
WARNER COMPANY
Comparative Balance Sheet
December 31
Assets 2023 2022
Cash $35,000 $20,000
Accounts receivable 20,000 14,000
Inventory 28,000 20,000
Property, plant, and equipment 60,000 78,000
Accumulated depreciation (32,000) (24,000)
Total $111,000 $108,000
Liabilities and Stockholders' Equity
Accounts payable $19,000 $15,000
Income taxes payable 7,000 8,000
Bonds payable 17,000 33,000
Common stock 18,000 14,000
Retained earnings 50,000 38,000
Total $111,000 $108,000
WARNER COMPANY
Income Statement
For the Year Ended December 31, 2022
Sales Revenue $242,000
Cost of goods sold 175,000
Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000 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 was $17,500.
2. Dividends declared and paid were $20,000.
3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale.
Instructions for Problem 3
(a) prepare a statement of cash flows using the indirect method.
(b) Compute free cash flow.
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