• 1.prepare cash flow statement using direct method for operating activities. 2.what is the purpose of the statement of cash flows? 3. list at least 5 possible causes for a company having trouble meeting its current debts when there has been an increase in cash.

To prepare the statement of cash flows, accountants for Rolex Paper Company have summarized 20X8 activity in the cash account as follows: Cash Required: Beginning balance Issuance of common stock Receipts of interest revenue Collections from customers Problem 1 Ending balance 87,100 60,800 14,100 308,100 82,500 Payments of operating expenses Payment of note payable Payment of income tax Payments on accounts payable Payment of dividends Payments of salaries and wages Payments of interest Purchase of equipment 46,100 89,300 8,000 101,600 1,800 67,500 21,800 51,500 1. Prepare the statement of cash flows of Rolex Paper Company, for the year ended December 31, 20X8, using the direct method for operating activities. [75 points] a. The president has reviewed these statements and has several questions. First, he would like you to explain in your own words what is the purpose of the Statement of Cash Flows. [10 points] b. He also is concerned that the last 3 years of the Statement of Cash Flows have shown that there has been an increase in cash but that the company is having trouble meeting its current debts. He would like you to help explain the reason for this. In your answer, list at least five possible causes for this trouble. [15 points] He is aware that you only have the last year's Statement of Cash Flows. Therefore, some of your answers may have to be general in nature...