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Presented below are the financial statements of Weller Company.
Presented below are the financial statements of Weller Company.WELLER COMPANYComparative Balance SheetsDecember 31Assets20072006Cash$35,000$20,000Accounts receivable33,00014,000Merchandise inventory27,00020,000Property, plant, and equipment60,00078,000Accumulated depreciation(29,000)(24,000)Total$126,000$108,000Liabilities and Stockholders' EquityAccounts payable$29,000$15,000Income taxes payable7,0008,000Bonds payable27,00033,000Common stock18,00014,000Retained earnings45,00038,000Total$126,000$108,000WELLER COMPANYIncome StatementFor the Year Ended December 31, 2007Sales$242,000Cost of goods sold175,000Gross profit67,000Selling expenses$18,000Administrative expenses6,00024,000Income from operations43,000Interest expense3,000Income before income taxes40,000Income tax expense8,000Net income$32,000Additional data:1.Dividends declared and paid were $25,0002.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 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.b. Free cash flow.
