Presented below are the financial statements of Weller Company.

Weller Company
Income Statement
For the year ended December 31, 2011
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 operating expenses.
4. All sales and purchases are on account.

Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute free cashflow.

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WELLER COMPANY Comparative Statements of Financial Position December 31 Assets 2011 Property. plant, and equipment Accumulated depreciation Merchandise inventory Accounts receivable Cash E 60,000 (29,000) 27,000 33,000 35,000 £126,000 78,000 (24.000) 20,000 14,000 20.000 E108,000 Total Equity and Liabilities Share capital-ordinary Retained earnings Bonds payablc Accounts payable Income taxes payable E 18,000 45,000 27,000 29,000 7,000 £126,000 14,000 38,000 33,000 15,000 8,000 E108,000 Total