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The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow: Rolling Hills, Inc. Income Statement Year Ended December 31, 2018 Net Sales

The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow:

Rolling Hills, Inc.

Income Statement

Year Ended December 31, 2018

Net Sales Revenue

$440,000

Cost of Goods Sold

209,200

Gross Profit

230,800

Operating Expenses:

Salaries Expense

$77,400

Depreciation ExpensePlant Assets

14,400

Other Operating Expenses

10,200

Total Operating Expenses

102,000

Operating Income

128,800

Other Income and (Expenses):

Interest Revenue

8,700

Interest Expense

(21,100)

Total Other Income and (Expenses)

(12,400)

Net Income Before Income Taxes

116,400

Income Tax Expense

20,000

Net Income

$96,400

Rolling Hills, Inc.

Comparative Balance Sheet

December 31, 2018 and 2017

2018

2017

Assets

Current Assets:

Cash

$26,900

$15,700

Accounts Receivable

26,500

25,400

Merchandise Inventory

79,800

91,500

Long-term Assets:

Land

35,100

14,000

Plant Assets

124,840

114,650

Accumulated DepreciationPlant Assets

(18,940)

(17,950)

Total Assets

$274,200

$243,300

Liabilities

Current Liabilities:

Accounts Payable

$35,700

$30,400

Accrued Liabilities

28,700

30,300

Long-term Liabilities:

Notes Payable

79,000

108,000

Total Liabilities

143,400

168,700

Stockholders' Equity

Common Stock, no par

88,900

64,500

Retained Earnings

41,900

10,100

Total Stockholders' Equity

130,800

74,600

Total Liabilities and Stockholders' Equity

$274,200

$243,300

Requirements:

1.

Prepare the 2018 statement of cash flows, formatting operating activities by the indirect method.

2.

How will what you learned in this problem help you evaluate an investment?

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