Financial and Managerial Accounting: P17-7A Presented below are the financial statements

Financial and Managerial Accounting 
P17-7A 
Presented below are the financial statements of Weller Company. 
WELLER COMPANY 
Comparative Balance Sheets 
December 31, 2010 
Assets 2010 2009 
Cash 35,000 20,000 
Accounts receivable 33,000 14,000 
Merchandise inventory 27,000 20,000 
Property, Plant and Equipment 60,000 78,000 
Accumulated depreciation (29,000) (24,000)
Total 126,000 108,000 

Liabilities and Stockholders' Equity 
Accounts payable 29,000 15,000 
Income taxes payable 7,000 8,000 
Bonds payable 27,000 33,000 
Common stock 18,000 14,000 
Retained earnings 45,000 38,000 
Total 126,000 108,000 

WELLER COMPANY 
Income Statement 
For the Year Ended December 31, 2010 
Sales 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 $25,000. 
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 selling expense category. 
4. All sales and purchases are on account. 

Instructions: 
a. Prepare a statement of cash flows using the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest eg 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).) 
b. Compute free cash flow.
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