question P14-7A

of the statement of cash flows using the Presented below are the financial statements of Weller Company. P14-7A Prep flows com WELLER COMPANY Comparative Balance Sheets December 31 (So Assets 2007 2008 Cash Accounts receivable $ 20,000 14,000 20,000 78,000 (24,000) $ 35,000 33,000 27,000 60,000 (29,000) $126,000 Merchandise inventory Property, plant, and equipment Accumulated depreciation $108,000 Total Liabilities and Stockholders' Equity $ 15,000 8,000 33,000 14,000 38,000 nity yton $ 29,000 7,000 27,000 18,000 45,000 Accounts payable Income taxes payable Bonds payable Common stock Retained earnings $108,000 $126,000 Total 14 Statement of Cash Flows WELLER COMPANY Income Statement For the Year Ended December 31, 2008 $242,000 175,000 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense oD 67,000 $18,000 6,000 24,000 43,000 3,000 40,000 8,000 Income before income taxes Income tax expense $ 32,000 Net income Additional data: 1. Dividends declared and paid 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 selling expense category. 4. All sales and purchases are on account. were $25,000. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow