A comparative bakance sheet for Rocker Company appears below activitie ROCKER CO

Question

A comparative bakance sheet for Rocker Company appears below activitie ROCKER COMPANY Comparative Balance Shact Cash Accounts recevable Inventory Prepaid expenses Lang-term investments Equipment Accumulated depreciation-equipment $ 34,000 $11,000 18,000 25,000 6,000 13,000 17,000 9,000 17,000 33,000 (15,000) 85.000 60,000 20,000) 123.000 Total assets Accounts payable Bonds payable Common stock S 17,000 36,000 40,000 30.000 $ 7,000 45,000 23,000 Rotained ies and stockholders equity Total liabilities and stockhokders' equity 1. Net income for the year ending December 31, 2017 was $35,000 2. Cash dividends of $15,000 were dedared and paid during the year 3. Long-term investments that had a cost of $17,000 were sold for $14,000 4. Sales for 2017 were $120,000, Instructions Prepare a statement of cash nows for the year ended December 31, 2017, using tive indirect method.

Explanation / Answer

Statement of Cash Flows for the year ended December 31, 2017 Particulars Amount ($) Cash Flow from operating Activities: Net Income 35000 Add: Loss on sale of investments 3000 Add: Depreciation (20000-15000) 5000 8000 Cash from operating activities before working capital adjustments 43000 Working Capital Adjustments: Increase in Accounts Receivable (18000-13000) -5000 Increase in Inventory (25000-17000) -8000 Decrease in Prepaid Expenses (9000-6000) 3000 Increase in Accounts Payable (17000-7000) 10000 0 Cash Flow from operating activities 43000 Cash Flow from Investing Activities: Sale of long term investments 14000 Purchase of equipment (60000-33000) -27000 -13000 Cash Flow from financing activities: Redemption of bonds (45000-36000) -9000 Issue of Common Stock (40000-23000) 17000 Dividend paid -15000 -7000 Cash Flow during the year 23000 Beginning Cash Balance 11000 Ending Cash Balance 34000

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