Presented here are the financial statements of Warner Company.

Additional data:

1. Depreciation expense was $17,500.
2. Dividends declared and paid were $20,000.

3. During the year, equipment was sold for $8,500 cash. This equipment originally cost $18,000 and had accumulated depreciation of $9,500 at the time of sale.
4 .Bonds were redeemed at their carrying value.
5. Common stock was issued at par for cash .

Instructions
a. Prepare a statement of cash flows using the indirect method.
b. Compute free cash flow.

Transcribed Image Text:

Warner Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total 2022 $ 35,000 20,000 28,000 60,000 (32,000) $111,000 $ 19,000 7,000 17,000 18,000 50,000 $111,000 2021 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108,000