Question

Dec 31, 2018 A comparative balance sheet for Rocker Company appears below: ROCKER COMPANY Comparative Balance Sheet Dec 31, 2019 Assets Cash $ 34,000 Accounts receivable 18,000 Inventory 25,000 Prepaid expenses 6,000 Long-term investments Equipment 60,000 Accumulated depreciation equipment (20,000) Total assets $123,000 Liabilities and Stockholders' Equity Accounts payable $ 17.000 Bonds payable 36.000 Common stock 40,000 Retained earnings Total liabilities and stockholders' equity $123,000 $11,000 13,000 17.000 9,000 17.000 33,000 (15,000) $85.000 $ 7.000 45,000 23,000 30,000 10.000 $85.000 Additional information: 1. Net income for the year ending December 31, 2019 was $35,000. 2. Cash dividends of $15,000 were declared and paid during the year. 3. Long-term investments that had a cost of $17,000 were sold for $14,000, 4. Sales for 2019 were $120,000. Instructions Prepare a statement of cash flows for the year ended December 31, 2019, using the indirect method.

Answer 1

35,000 5,000 3,000 -5,000 -8,000 3,000 10,000 Answer: ROCKER COMPANY Statement of Cash Flows - Indirect Method for the year ended December 31, 2019 Cash flow from Operating Activities: Net Income Adjustments to reconcile Net Income to Net Cash provided by Operating Activities: Depreciation Expense Loss on Sale of Long Term Investments Increase in Accounts Receivable Increase in Inventory Decrease in Prepaid Expenses Increase in Accounts Payable Net Cash provided by Operating Activities Cash Flow from Investing Actvities: Sale of Long Term Invetsments Purchase of Equipment Net Cash used for Investing Activities Cash flow from Financing Activities: Issuance of Common Stock Repayment of Bonds Payable Payment of Dividend Net Cash used for Financing Activities Net Increase in Cash Add: Cash balance at the beginning of year Cash balance at the end of the year 8,000 43,000 14,000 -27,000 -13,000 17,000 -9,000 -15,000 -7,000 23,000 11,000 34,000