Question

A The comparative balance sheets for Rothlisberger Company as of December 31 P17-11A The are presented below. $180,250 Prepare a statement of cash flows-indirect method. (LO) ROTHLISBERGER COMPANY Comparative Balance Sheets December 31 Assets 2017 Cash $ 81,000 Accounts receivable 41,000 Inventory 151,450 Prepaid expenses 15,280 Land 105,000 Buildings 200,000 Accumulated depreciation-buildings (60,000) Equipment 221,000 Accumulated depreciation--equipment (45,000) Total $709,730 2016 $ 45,000 62,000 142,000 21,000 130,000 200,000 (40,000) 155,000 (35,000) $680,000 Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock, $1 par Retained earnings Total $ 47,730 260,000 200,000 202,000 $709,730 $ 40,000 300,000 160,000 180,000 $680,000 Additional information: 1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720. 2. Land was sold for cash at book value. 3. Cash dividends of $20,000 were paid. 4. Net income for 2017 was $42,000.

Answer 1

Solution: $ 42,000 Rothlisberger Company Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2017 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Loss on sale of equipment (WN-1) Decrease in accounts receivable ($62,000 - $41,000) Increase in inventory ($151,450 - $142,000) Decrease in prepaid expenses ($21,000 - $15,280) Increase in accounts payable ($47,730 - $40,000) $42,000 $4,000 $21,000 ($9,450) $5,720 $7,730 $71,000 $113,000 Net Cash provided by Operating Activities Cash flows from investing activities Cash received from sale of land ($130,000 - $105,000) Cash paid for equipment purchase Cash received from sale of equipment Net Cash used in Investing Activities $25,000 ($88,000) $6,000 ($57,000) Cash flows from financing activities Cash paid for dividends Net Cash used in Financing Activities ($20,000) ($20,000) Net increase (decrease) in cash Cash balance at prior year end Cash balance at current year end $36,000 $45,000 $81,000 WN-1: Loss on sale of equipment Book value of the equipment sold Less: Cash received from sale of equipment Loss on sale of equipment $10,000 ($6,000) $4,000