1) Preparing the statement of cash flows (20 points).

The income statement for RockHounds Inc. follows:

RockHounds Inc.

Income Statement

Year Ended September 30, 2015

Sales Revenue $235,000

Cost of Goods Sold 97,000

Gross Profit 138,000

Operating Expenses:

Salaries Expense $57,000

Depreciation Expense 26,000

Total Operating Expense 83,000

Net Income Before Income Taxes 55,000

Income Tax Expense 4,000

Net Income $51,000

Additional data follows:

a) Acquisition of plant assets is $119,000. Of this amount, $100,000 is paid in cash and $19,000 by

signing a note payable.

b) Cash receipt for from sale of land totals $28,000. There was no gain or loss.

c) Cash receipts from issuance of common stock total $29,000.

d) Payment of note payable is $18,000.

e) Payment of dividends is $8,000

f) From the Balance Sheet:

September 30

2015 2014

Cash $30,000 $8,000

Accounts Receivable 41,000 59,000

Merchandise Inventory 97,000 93,000

Plant Assets 199,000 80,000

Accumulated Depreciation (46,000) (20,000)

Land 72,000 100,000

Accounts Payable 30,000 17,000

Accrued Liabilities 11,000 24,000

Notes Payable (long-term) 19,000 18,000

Common Stock 39,000 10,000

Retained Earnings 294,000 251,000

REQUIREMENTS:

Prepare RockHounds, Inc. statement of cash flows (Page 940, Exhibit 16-5) for the year ended

September 30, 2015, using the indirect method. Include a separate section for non-cash

investing and financing activities.