Preparing a statement of cash flow. (Adapted from CPA examination.) Roth Company has prepared its financial statements for the year ended December 31, 2008, and for the three months ended March 31, 2009. You will prepare a statement of cash flows for the three months ended March 31, 2009. Exhibit 15.9 presents the company's balance sheet at December 31, 2008, and March 31, 2009, and Exhibit 15.10 presents its income statement for the three months ended March 31, 2009. You believe that the amounts presented are correct.

Your discussion with the company's controller and a review of the financial records reveal the following information:

(1) On January 8, 2009, the company sold marketable securities for cash. The firm had purchased these securities on December 31, 2008. The firm purchased no marketable securities during 2008.

(2) The company's preferred stock is convertible into common stock at a rate of one share of preferred for two shares of common. The preferred stock and common stock have par values of $2 and $1, respectively.

(3) On January 17, 2009, the local government condemned three acres of Land. Roth Company received an award of $48,000 in cash on March 22, 2009. It does not expect to purchase additional land as a replacement.

(4) On March 25, 2009, the company purchased equipment for cash.

(5) Interest expense on bonds payable exceeded the cash coupon payments by $225 during the three-month period. On March 29, 2009, the company issued bonds payable for cash.

(6) Roth Company declared 512,000 in dividends during the three months.

a. Prepare a T-account work sheet for the preparation of a statement of cash flows, defining funds as cash and cash equivalents

b. Prepare a formal statement of cash flows for Roth Company for the three months ending March 31, 2009. Use the indirect method

c. Derive a presentation of cash flows from operations using the directmethod.

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Roth Company Balance Sheet (Problem 8) EXHIBIT 15.9 March 31, 2009 December 31, 2008 Cash $131,100 $37,950 Marketable Securities Available for Sale 24,000 10,200 Accounts Receivable (net) . 36,480 73,980 Inventory Total Current Assets 72,885 46,635 $288,165 $145,065 Land 28,050 60,000 Building 375,000 375,000 Equipment Accumulated Depreciation . Investment in 30%-Owned Company (using equity method) 122,250 (24,375) (22,500) 100,470 91,830 Other Assets 22,650 22,650 Total Assets . $912,210 S672,045 $ 25,995 $ 31,830 Accounts Payable Dividend Payable Income Taxes Payable . 12,000 51,924 Tatal Current Liabilities S 31,830 S 89,919 Other Liabilities 279,000 279,000 Bonds Payable . 169,275 71,550 Deferred Income Tax 1,269 765 Preferred Stock 45,000 Common Stock. 165,000 120,000 Unrealized Holding Loss on Marketable Securities Retained Earnings Total Liabilities and Shareholders' Equity (750) (750) 208,497 124,650 $912,210 5672,045 Roth Company Income Statement Data For the Three Months Ended March 31, 2009 EXHIBIT 15.10 (Problem 8) Sales. $364,212 Gain on Sale of Marketable Securities 3,600 Equity in Earnings of 30%-Owned Company 8,640 .3. Gain on Condemnation af Land. 16,050 Total Revenues $392,502 Cost of Saies . $207,612 General and Administrative Expenses Depreciation Interest Expense 33,015 1,875 1,725 Income Taxes 52,428 Total Expenses Net Income $296,655 $ 95,847