ACC – Rajesh Company Problem

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Description

Presented below are the financial statements of Rajesh Company.

Rajesh Company
Comparative Balance Sheets
December 31

Assets

2014

2013

Cash $37,390

$19,470

Accounts receivable 32,220

19,490

Inventory 29,940

20,610

Equipment 59,580

77,930

Accumulated depreciation—equipment (29,760)

(23,270)

Total $129,740

$114,230

Liabilities and Stockholders’ Equity

Accounts payable $28,930

$16,610

Income taxes payable 7,050

8,250

Bonds payable 27,410 32,660

Common stock 17,450

13,400

Retained earnings 48,900

43,310

Total $129,740 $114,230

Rajesh Company
Income Statement
For the Year Ended December 31, 2014

Sales revenue $242,840
Cost of goods sold 176,320

Gross profit 66,520

Operating expenses 23,240

Income from operations 43,280

Interest expense 2,900

Income before income taxes 40,380

Income tax expense 8,180

Net income $32,200

Additional data:

1. Depreciation expense is 15,060.
2. Dividends declared and paid were $26,610.
3. During the year equipment was sold for $9,780cash. This equipment cost $18,350 originally and had accumulated depreciation of $8,570 at the time of sale.

(a) Prepare a statement of cash flows using the indirect method.

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