A comparutive balance sheet for Rocker Company appears below ROCKER COMPANY Comp

Question

A comparutive balance sheet for Rocker Company appears below ROCKER COMPANY Comparative Balance Sheet activi ssets Cash $11,000 13,000 17,000 9,000 17,000 33,000 S 34,000 18,000 25,000 6,000 Prepaid expenses Long-term investments Equipment 60,000 122.000) 123.000 Total assets Bonds payable Common stock Retained eamings S 17,000 36,000 40,000 $ 7.000 45,000 23,000 Total liabilites and stockholders' equity 1. Net income for the year ending December 31, 2017 was $35,000 2. Cash dividends of $15,000 were dedared ard paxt during the year 3 Long-term investments that had a cost of $17.000 were soid for $14,000 4. Sales for 2017 were $120,000, Prepare a statement of cash fows for the year ended December 31, 2017, using the indirect method

Explanation / Answer

Statement of cash flow under indirect method :

Cash flow from operating activities Net income 35000 Adjustment to reconcile net income Depreciation exp 5000 Loss on sale of investment 3000 Increase account receivable (5000) Increase inventory (8000) Decrease prepaid exp 3000 Increase account payable 10000 Net cash flow from operating activities 43000 Cash flow from investing activities Sale of investment 14000 Purchase equipment (27000) Net cash flow from investing activities (13000) Cash flow from financing activities Dividend paid (15000) Repaid bonds payable (9000) Issue common stock 17000 Net cash flow from financing activities (7000) Net cash flow 23000 Beginning cash 11000 Ending cash 34000

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