Answer Happy

JANG COMPANY Comparative Balance Sheets December 31 Assets 2011 Cash $ 24,000 Accounts receivable 25,000 Merchandise inventory 41.000 Property, plant, and equipment $ 69,000 Less Acumulated depreciation (26,000) 43,000 Total $133.000 2010 $ 33,000 14,000 25.000 $ 78,000 (24,000) 54,000 $126.000 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $ 30,000 25,000 20,000 25,000 33.000 $133.000 $ 43,000 20.000 10,000 25.000 28.000 $126.000 JANG COMPANY Income Statement For the Year Ended December 31, 2011 Sales $281,000 Cost of goods sold 204,000 Gross profit 77.000 Selling expenses $28,000 Administrative expenses 9,000 37,000 Income from operations 40,000 Interest expense 5.000 Income before income taxes 35.000 Income tax expense 10,000 Net income $ 25,000 Additional data: 1. Dividends of $20,000 were declared and paid. 2. During the year equipment was sold for $12,000 cash. This equipment cost $15,000 originally and had a book value of $12,000 at the time of sale, 3. All depreciation expense, $5,000, is in the selling expense category 4. All sales and purchases are on account. S. Additional equipment was purchased for 56,000 cash. Instructions (a) Prepare a statement of cash flows using the indirect method (b) Compute free cash flow,