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Preparing a Statement of Cash Flows ( Indirect Method ) Rainbow Company's income statement and comparative balance sheets follow. RAINBOW COMPANY Income Statement For Year
Preparing a Statement of Cash Flows Indirect Method Rainbow Company's income statement and comparative balance sheets follow. RAINBOW COMPANY Income Statement For Year Ended December Sales $ Dividend Income Total Revenue Cost of Goods Sold $ Wages and Other Operating Expenses Depreciation Expense Patent Amortization Expense Interest Expense Income Tax Expense Loss on Sale of Equipment Gain on Sale of Investments Net Income $ RAINBOW COMPANY Balance Sheets December December Assets Cash and Cash Equivalents $ $ Accounts Receivable Inventory Prepaid Expenses LongTerm Investments Land Buildings Accumulated DepreciationBuildings Equipment Accumulated depreciationEquipment Patents Total Assets $ $ Liabilities and Stockholders Equity Accounts Payable $ $ Interest Payable Income Tax Payable Bonds Payable Preferred Stock $ par value Common Stock $ par value Paidin capital in excess of par valueCommon Retained Earnings Total Liabilities and Stockholders Equity $ $ During the following transactions and events occurred: Sold longterm investments costing $ for $ cash. Purchased land for cash. Capitalized an expenditure made to improve the building. Sold equipment for $ cash that originally cost $ and had $ accumulated depreciation. Issued bonds payable at face value for cash. Acquired a patent with a fair value of $ by issuing shares of preferred stock at par value. Declared and paid a $ cash dividend. Issued shares of common stock for cash at $ per share. Recorded depreciation of $ on buildings and $ on equipment. a Compute the change in cash and cash equivalents that occurred during b Prepare a statement of cash flows using the indirect method. c Prepare separate schedules showing cash paid for interest and for income taxes and noncash investing and financing transactions. d Compute its operating cash flow to current liabilities ratio, operating cash flow to capital expenditures ratio, and free cash flow. part a part b part c part d a Compute the change in cash and cash equivalents that occurred during Note: Use a negative sign with your answer, if the change was a decrease. $Answer Please answer all parts of the question.
Preparing a Statement of Cash Flows Indirect Method
Rainbow Company's income statement and comparative balance sheets follow.
RAINBOW COMPANY
Income Statement
For Year Ended December
Sales $
Dividend Income
Total Revenue
Cost of Goods Sold $
Wages and Other Operating Expenses
Depreciation Expense
Patent Amortization Expense
Interest Expense
Income Tax Expense
Loss on Sale of Equipment
Gain on Sale of Investments
Net Income $
RAINBOW COMPANY
Balance Sheets
December December
Assets
Cash and Cash Equivalents $ $
Accounts Receivable
Inventory
Prepaid Expenses
LongTerm Investments
Land
Buildings
Accumulated DepreciationBuildings
Equipment
Accumulated depreciationEquipment
Patents
Total Assets $ $
Liabilities and Stockholders Equity
Accounts Payable $ $
Interest Payable
Income Tax Payable
Bonds Payable
Preferred Stock $ par value
Common Stock $ par value
Paidin capital in excess of par valueCommon
Retained Earnings
Total Liabilities and Stockholders Equity $ $
During the following transactions and events occurred:
Sold longterm investments costing $ for $ cash.
Purchased land for cash.
Capitalized an expenditure made to improve the building.
Sold equipment for $ cash that originally cost $ and had $ accumulated depreciation.
Issued bonds payable at face value for cash.
Acquired a patent with a fair value of $ by issuing shares of preferred stock at par value.
Declared and paid a $ cash dividend.
Issued shares of common stock for cash at $ per share.
Recorded depreciation of $ on buildings and $ on equipment.
a Compute the change in cash and cash equivalents that occurred during
b Prepare a statement of cash flows using the indirect method.
c Prepare separate schedules showing cash paid for interest and for income taxes and noncash investing and financing transactions.
d Compute its operating cash flow to current liabilities ratio, operating cash flow to capital expenditures ratio, and free cash flow.
part a
part b
part c
part d
a Compute the change in cash and cash equivalents that occurred during
Note: Use a negative sign with your answer, if the change was a decrease.
$Answer
Please answer all parts of the question.
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