Presented below are the of Nosker Company.
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
1. Prepare a statement of cash flows using the indirect method.
Cash from operations $31,500
2. Compute free cash flow.
Data for Nosker Company are presented in P17-7A. Further analysis reveals the following.
1. Accounts payable pertain to merchandise suppliers.
2. All operating expenses except for depreciation were paid in cash.
Instructions
1. Prepare a statement of cash flows for Nosker Company using the direct method.
Cash from operations $31,500
2. Compute free cash flow.
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