Preparing the statement of cash flows—indirect method with noncash transactions [35-45 min...

Preparing the statement of cash flows—indirect method with noncash transactions [35-45 min]

The 2012 comparative balance sheet and income statement of Rolling Hills, Inc., follow:

Additionally, Rolling Hills purchased land of $23,600 by financing it 100% with long-term notes payable during 2012. During the year, there were no sales of land or equipment, no additional issuances of notes payable, no retirements of stock, and no treasury stock transactions.

Requirements

1. Prepare the 2012 statement of cash flows, formatting operating activities by the indirect method.

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2. How will what you learned in this problem help you evaluate an investment?