The balance sheet accounts of Rockwall Corporation at the beginning and end of 2016 are: 1-Jan-16 $110,700 $380,900 $576,475 $12,000 Cash Accounts Receivable Inventory Prepaid Expenses Investment in subsidiary Held to Maturity Debt Securities Land Buildings Equipment Patents Trademarks Bond Discount and issue costs 31-Dec-16 $99,435 $424,600 $635,740 $20,000 $200,000 $16,460 $100,000 $525,000 $381,000 $86,000 $25,000 $1,165 $14,850 $100,000 $400,000 $290,000 $70,000 $35,000 $6,075 Total Debits $2,514,400 $1,996,000 Accounts payable Income Taxes payable Salaries and wages payable Allowance for doubtful accounts Accumulated depreciation - buildings Accumulated depreciation - equipment Long-term notes payable Bonds payable Premium on bonds payable Common stock Paid-in capital in excess of par-common $534,000 $68,000 $73,500 $25,000 $248,000 $160,000 $75,000 $400,000 $7,762 $150,000 $508,000 $34,500 $12,900 $23,000 $230,000 $103,000 $75,000 $300,000 SO $125,000 stock 5568,000 S205,138 $418,000 $166,600 Retained earnings Total credits $2,514,400 $1,996,000 You also have the following information: 1. On November 1, 2016, 25,000 shares of $1 par stock were sold for $175,000. 2. A patent was purchased for $31,000 3. During the year, equipment that had a cost basis of $26,400 and on which there was accumulated depreciation of $5,800 was sold for $15,000. No other plant assets were sold during the year. 4. The 10%, $300,000 40-year bonds were dated and issued on January 2, 2003. Interest was payable on June 30 and December 31. They were sold originally at 97. These bonds were retired at 101 plus accrued interest on May 31, 2016. 5. The 6%. $400,000 20-year bonds were dated January 1, 2016, and were sold on May 31 at 102 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,200. 6. Rockwall Corporation acquired 60% control in Jones Company on January 2, 2016, for $146,000. The income statement of Jones Company for 2016 shows a net income of $90,000 7. Extraordinary repairs to buildings of $12,600 were charged to Accumulated Depreciation - Buildings. 8. Interest paid in 2016 was $31,000 and income taxes paid were $38,000. 9. Net income for the year totaled $76,538. Instructions a) From the information given, prepare a statement of cash flows using the indirect method. The company uses straight-line amortization for bond interest. b) Using the details of your cash flow statement analyze the activities of Rockwall Corporation during 2016. Limit: 1 page double spaced with one inch margins. The balance sheet accounts of Rockwall Corporation at the beginning and end of 2016 are: 1-Jan-16 $110,700 $380,900 $576,475 $12,000 Cash Accounts Receivable Inventory Prepaid Expenses Investment in subsidiary Held to Maturity Debt Securities Land Buildings Equipment Patents Trademarks Bond Discount and issue costs 31-Dec-16 $99,435 $424,600 $635,740 $20,000 $200,000 $16,460 $100,000 $525,000 $381,000 $86,000 $25,000 $1,165 $14,850 $100,000 $400,000 $290,000 $70,000 $35,000 $6,075 Total Debits $2,514,400 $1,996,000 Accounts payable Income Taxes payable Salaries and wages payable Allowance for doubtful accounts Accumulated depreciation - buildings Accumulated depreciation - equipment Long-term notes payable Bonds payable Premium on bonds payable Common stock Paid-in capital in excess of par-common $534,000 $68,000 $73,500 $25,000 $248,000 $160,000 $75,000 $400,000 $7,762 $150,000 $508,000 $34,500 $12,900 $23,000 $230,000 $103,000 $75,000 $300,000 SO $125,000 stock 5568,000 S205,138 $418,000 $166,600 Retained earnings Total credits $2,514,400 $1,996,000 You also have the following information: 1. On November 1, 2016, 25,000 shares of $1 par stock were sold for $175,000. 2. A patent was purchased for $31,000 3. During the year, equipment that had a cost basis of $26,400 and on which there was accumulated depreciation of $5,800 was sold for $15,000. No other plant assets were sold during the year. 4. The 10%, $300,000 40-year bonds were dated and issued on January 2, 2003. Interest was payable on June 30 and December 31. They were sold originally at 97. These bonds were retired at 101 plus accrued interest on May 31, 2016. 5. The 6%. $400,000 20-year bonds were dated January 1, 2016, and were sold on May 31 at 102 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,200. 6. Rockwall Corporation acquired 60% control in Jones Company on January 2, 2016, for $146,000. The income statement of Jones Company for 2016 shows a net income of $90,000 7. Extraordinary repairs to buildings of $12,600 were charged to Accumulated Depreciation - Buildings. 8. Interest paid in 2016 was $31,000 and income taxes paid were $38,000. 9. Net income for the year totaled $76,538. Instructions a) From the information given, prepare a statement of cash flows using the indirect method. The company uses straight-line amortization for bond interest. b) Using the details of your cash flow statement analyze the activities of Rockwall Corporation during 2016. Limit: 1 page double spaced with one inch margins