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to prepare the statement of cash flows, accountants for Rolex Paper Company have summarized 20X8 activity in the cash account as follows: Cash Beginning balance

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to prepare the statement of cash flows, accountants for Rolex Paper Company have summarized 20X8 activity in the cash account as follows: Cash Beginning balance 87,100 Payments of operating expenses 46,100 Issuance of common stock 60,800 Payment of note payable 89,300 Receipts of interest revenue 14,100 Payment of income tax 8,000 Collections from customers 308,100 Payments on accounts payable 101,600 Payment of dividends 1,800 Payments of salaries and wages 67,500 Payments of interest 21,800 Purchase of equipment 51,500 Ending balance 82,500 Required: 1. Prepare the statement of cash flows of Rolex Paper Company, for the year ended December 31, 20X8, using the direct method for operating activities. [ 75 points) a. The president has reviewed these statements and has several questions. First, he would like you to explain in your own words what is the purpose of the Statement of Cash Flows. [10 points] b. He also is concerned that the last 3 years of the Statement of Cash Flows have shown that there has been an increase in cash but that the company is having trouble meeting its current debts. He would like you to help explain the reason for this. In your answer, list at least five possible causes for this trouble. [15 points) He is aware that you only have the last year's Statement of Cash Flows. Therefore, some of your answers may have to be general in nature. To prepare the statement of cash flows, accountants for Rolex Paper Company have summarized 20X8 activity in the cash account as follows: Cash Beginning balance 87,100 Payments of operating expenses 46,100 Issuance of common stock 60,800 Payment of note payable 89,300 Receipts of interest revenue 14,100 Payment of income tax 8,000 Collections from customers 308,100 Payments on accounts payable 101,600 Payment of dividends 1,800 Payments of salaries and wages 67,500 Payments of interest 21,800 Purchase of equipment 51,500 Ending balance 82,500 Required: 1. Prepare the statement of cash flows of Rolex Paper Company, for the year ended December 31, 20X8, using the direct method for operating activities. [ 75 points) a. The president has reviewed these statements and has several questions. First, he would like you to explain in your own words what is the purpose of the Statement of Cash Flows. [10 points) b. He also is concerned that the last 3 years of the Statement of Cash Flows have shown that there has been an increase in cash but that the company is having trouble meeting its current debts. He would like you to help explain the reason for this. In your answer, list at least five possible causes for this trouble. [15 points) He is aware that you only have the last year's Statement of Cash Flows. Therefore, some of your answers may have to be general in nature

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