Question
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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