Question

Preparing a Statement of Cash Flows (Direct Method) Rainbow Company's income statement and comparative balance sheets follow. RAINBOW COMPANY Income Statement For Year Ended December 31, 2016 Sales $2,250,000 Dividend Income 45,000 2,295,000 $1,320,000 390,000 117,000 21,000 Total Revenue Cost of Goods Sold Wages and Other Operating Expenses Depreciation Expense Patent Amortization Expense Interest Expense Income Tax Expense Loss on Sale of Equipment Gain on Sale of Investments Net Income 39,000 132,000 15,000 (9,000) 2,025,000 $270,000 RAINBOW COMPANY Balance Sheets December 31, 2016 December 31, 2015 Assets Cash and Cash Equivalents $57,000 $75,000 Accounts Receivable 120,000 90,000 Inventory 309,000 231,000 Prepaid Expenses 30,000 18,000 Long-Term Investments 171,000 Land 570,000 300,000 Buildings 1,335,000 1,050,000 Accumulated Depreciation-Buildings (273,000) (225,000) Equipment 537,000 675,000 Accumulated depreciation-Equipment (126,000) (138,000) Patents 150,000 96,000 Total Assets $2,709,000 $2,343,000 Liabilities and Stockholders' Equity Accounts Payable $60,000 $48,000 Interest Payable 18,000 15,000 Income Tax Payable 24,000 30,000 Bonds Payable 465,000 375,000 Preferred Stock ($100 par value) 300,000 225,000 Common Stock ($5 par value) 1,137,000 1,092,000
m

Answer 1

Cash paid 189 dela Change in Cech ? Cash Equislantes == 18,000 (steno-nasan Statement of Cash Roys Amount Pocticulars Back Alors fosen Operating Activitate Cash faceived from customos 22,20,000 Cash received as dividend 45000 22,65.000 Cosh paid tas maschandise puscheded - 13,86,000 lothes operating expt - 4,02,000 Cash paid for interest - 36,000 Cash paid for become taxes - 1,38,000 -19.62.00 Net Coen flere operating activities $3,03,00 (20 Cash flows from Sanwerting Activities Sale of investments 1,80,000 Perchase of hand - 270,000 Improvements to building 285,000 Sak of equipment 42000-3.33 Dat Cach team testing activities 3o) Cash Dlou from firencing Active & Issuance of Common Stock 72000 Payment oz Sávisland - 150,000 Issue of Bonds Payable Not Cash from financing Actistics No change in cash (4) Begining Cash Balance 75.000 Ending Cash Balance $ 57,000 (42,33,000 90.000 $ 12000

Cepamelahiban I ܘܘܘ,2J wes Feconcilation of net income, to net operating cont. Ahow Net Income $ 2,990,000 spoul to connect met income to come basis 1,151,000 Yetent amosdizatian cepat Low on debe of equipment 15,000 Gain on sale of investments 9,000 Accounts Receivable chase - 30,000 Autora. Shvantssay in seade -78,000 Prepaid Expe increase - 12000 Account Payable increase 12,000 Interest Payable thereals 3,000 Income Tax Payable decrease 6,000 Wat Cosi provided by spenting setustee 3,03,000 (6) Scherlule or Non cach investing and financing antistics Acquistion of patents by issuing 750 shares of profesored stock et pasi vele w Cash fald from internet Interest Expenses 39.000 (-) increase in interest heyable - 3,000 Not Cash paid fall interest = $36,000 Cash foon for Income Taxes! Income Tax Expense 2.32000 (4) Decrease in Tex toyable + 6,000 Net cash paid for income tax 2$ 138,000 $ 0.00

- 30,000 Working Notes & Cash Received from Customers Salad 22,50,000 (s) Increase in accounts scenivable Cech received from customer = $ 2220000 Cash You for Merchandise Purchased lost of goods sold 13,20,000 (+) Increase & inventory 78000 Merchandise Porchased : $ 13,98,000 (-) Increase in Accounts Payable - 12000 Caush prill fort wuchandoke, proschadeal $13,86,000 Pach. Tid for apet & other spesiating experien eloges 8 other operating cups 3,90,000 1+) Energia Sor prepaid expl 12,000 Cash Paid for wages other operating & 4,02,000 en
Here is the solution if any doubt please ask. Kindly rate me. Thankyou