Rajesh Company, Comparative Balance Sheets

Problem 137A Presented below are the financial statements of Rajesh Company. Rajesh Company Comparative Balance Sheets December 31 Assets 2014 2013 Cash $37,000 $20,000 Accounts receivable 33,000 14,000 Inventory 30,000 20,000 Equipment 60,000 78,000 (29,000 ) (24,000 ) $131,000 $108,000 $29,000 $ 15,000 Accumulated depreciationequipment Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable 7,000 8,000 27,000 Bonds payable 33,000 Common stock 18,000 14,000 Retained earnings 50,000 38,000 $131,000 $108,000 Total 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. (a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a sign e.g. 15,000 or in parenthesis e.g. (15,000).) RAJESH COMPANY Statement of Cash Flows For the Year Ended December 31, 2014 $ Adjustments to reconcile net income to $ $ (b) Compute free cash flow. Free cash flow $