Presented below are the financial statements of Nosker Company.
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NOSKER COMPANY
Comparative Balance Sheets December 31
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Assets
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2014
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2013
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Cash
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$ 38,000
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$ 20,000
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Accounts receivable
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30,000
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14,000
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Inventory
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27,000
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20,000
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Equipment
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60,000
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78,000
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Accumulated depreciation—equipment
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(29,000)
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(24,000)
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Total
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$126,000
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$108,000
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Liabilities and Stockholders' Equity
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|
|
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Accounts payable
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$ 24,000
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$ 15,000
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Income taxes payable
|
7,000
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8,000
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Bonds payable
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27,000
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33,000
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Common stock
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18,000
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14,000
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Retained earnings
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50,000
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38,000
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Total
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$126,000
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$108,000
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NOSKER COMPANY
Income Statement
For the Year Ended December 31, 2014
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Sales revenue
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$242,000
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Cost of goods sold
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175,000
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Gross profit
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67,000
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Operating expenses
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24,000
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Income from operations
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43,000
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Interest expense
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3,000
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Income before income taxes
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40,000
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Income tax expense
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8,000
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Net income
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$ 32,000
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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.Cash from operations $31,500
(b) Compute free cash flow.