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 Revenue		$440,000
Cost of Goods Sold		209,200
Gross Profit		230,800
Operating Expenses:
Salaries Expense	$77,400
Depreciation Expense—Plant 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 Depreciation—Plant 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?

Answer 1