Compute free cash flow, During the year equipment was sold

Compute free cash flow

Assignment Help Accounting Basics

Reference no: EM131018519

Presented below are the financial statements of Nosker Company.

NOSKER COMPANY Comparative Balance Sheets December 31
Assets	2014	2013
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, 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. 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.

Reference no: EM131018519

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