The 2017 and 2016 balance sheets of Rabb Corporation follow. The 2017 income statement is also provided. Rabb had no noncash investing and financing transactions during 2017. During theyear, the company sold equipment for $15,100, which had originally cost $13,500 and had a book value of $10,500. The company did not issue any notes payable during the year but did issue common stock for $31,000. The company purchased plant assets and long-term investments with cash.

Rabb Corporation

Income Statement

For the Year Ended December 31, 2017

Sales revenues			$347,000
Less: Cost of goods sold			76,000
Gross profit			$271,000
Less operating expenses:
Salaries and wages expense		$24,500
Depreciation expense		5,900
Other operating expenses		13,000
	Total operating expenses		43,400
Operating income			$227,600
Plus other income and less other expenses:
Interest expense		9,900
Gain on sale of PP&E		4,600
	Total other income and expenses		5,300
Income before income taxes			222,300
Less: Income tax expense			37,000
Net income			$185,300

Rabb Corporation
Comparative Balance Sheets
December 31, 2017 and 2016
Assets		2017	2016
Current assets:
Cash		$51,500	$20,500
Accounts receivable		32,300	29,100
Inventory		86,500	93,000
Prepaid insurance		3,300	2,600
Total current assets		$173,600	$145,200
Property, plant, and equipment		152,000	138,000
Less: Accumulated depreciation		(30,300)	(27,400)
Investments		117,000	0
Total assets		$412,300	$255,800
Liabilities
Current liabilities:
Accounts payable		$33,900	$36,500
Wages payable		2,900	7,300
Interest payable		2,100	0
Income taxes payable		5,400	0
Other accrued expenses payable		18,500	22,500
Total current liablities		$62,800	$66,300
Long-term liabilities		76,000	110,000
Total liabilities		$138,800	$176,300
Stockholders' equity
Common stock		$102,000	$71,000
Retained earnings		171,500	8,500
Total stockholders' equity		$273,500	$79,500
Total liabilities and equity		$412,300	$255,800

Requirements

1. Prepare the statement of cash flows for Rabb Corporation for 2017 using the indirect method.

2. Evaluate the company's cash flows for the year. Discuss each of the categories of cash flows in your response.