/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q37PGA Preparing the statement of cash ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 14: Q37PGA (page 787)

Preparing the statement of cash flows鈥攄irect method Use the Rolling Hills, Inc. data from Problem P14-34A. Requirements

1. Prepare the 2018 statement of cash flows by the direct method.

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

Short Answer

Expert verified
  1. Net cash from operating activities is $125,100.
  2. Value of new investment during the year is $23,600

Step by step solution

01

Statement of cash flows using the direct method

Rolling Hills Inc.

Statement of Cash Flows

For the year ended December 31, 2018

Cash Flows From Operating Activities:

Receipts:

From customers ($25,400+$440,000-$26,500)

$438,900

Interest revenue

$8,700

Payments:

To accounts payable

($193,800)

To employees

($77,400)

To other operating expenses

($10,200)

For interest expense

($21,100)

To income tax

($20,000)

Net cash provided/ (used) in operating activities

$125,100

Cash Flows From Investing Activities:

Purchase of land

($23,600)

Net cash provided/ (used) in investing activities

($23,600)

Cash Flows From Financing Activities:

Issuance of common stock

$24,400

Payment of notes payable

($50,100)

Dividend paid

($64,600)

Net cash provided/ (used) in financing activities

($90,300)

Net increase/(Decrease) in cash

$11,200

Cash Balance, December 31, 2017

$15,700

Cash Balance, December 31, 2018

$26,900

02

Schedule of non-cash investing and financing activities

Rolling Hills Inc.

Statement of Cash Flows (Partial)

For the year ended December 31, 2018

Non-cash Investing and financing activities

Acquisition of land by issuing long-term notes payable

$21,100

Total Non-cash Investing and financing activities

$21,100

03

Evaluation of the investment  

The value of the purchase of the plant is determined by taking the opening balance i.e., $114,650 and subtracting the cost of the sold plant i.e., $13410 then comparing it to the closing balance of the plant i.e., $124840. Therefore, the difference now will be the purchase of the plant i.e., $23600.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question: Preparing the statement of cash flows鈥攊ndirect method Use the Preston Media Corporation data in Short Exercise S14-7 and the results you calculated from the requirements. Prepare Preston Media鈥檚 statement of cash flows鈥� indirect method鈥攆or the year ended December 31, 2018.

Question: Computing cash flows from operating activities鈥攊ndirect method

DVR Equipment, Inc. reported the following data for 2018:

Income Statement:

Net Income $ 43,000

Depreciation Expense 6,000

Balance Sheet:

Increase in Accounts Receivable 6,000

Decrease in Accounts Payable 2,000

Compute DVR鈥檚 net cash provided by operating activities鈥攊ndirect method.

Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plansto purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, itplans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019,what would be the amount of free cash flow?

Using a spreadsheet to prepare the statement of cash flows鈥� indirect method The 2018 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro disposed of a plant asset at book value in 2018.

Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method. A plant asset was disposed of for \(0. The cost and accumulated depreciation of the disposed asset was \)13,600. There were no sales of land, no retirement of common stock, and no treasury stock transactions. Assume plant asset and land acquisitions were for cash.

Identifying and reporting non-cash transactions

Dirtbikes, Inc. identified the following selected transactions that occurred during the year ended December 31, 2018:

  1. Issued 750 shares of \(3 par common stock for cash of \)17,000.
  2. Issued 5,100 shares of \(3 par common stock for a building with a fair market value of \)96,000.
  3. Purchased new truck with a fair market value of \(29,000. Financed it 100% with a long-term note.
  4. Retired short-term notes of \)28,000 by issuing 1,900 shares of \(3 par common stock.
  5. Paid long-term note of \)10,500 to Bank of Tallahassee. Issued new long-term note of $23,000 to Bank of Trust.

Identify any non-cash transactions that occurred during the year, and show how they would be reported in the non-cash investing and financing activities section of the statement of cash flows
See all solutions

Recommended explanations on Business Studies Textbooks

Finance Literacy (Business Studies)

Read Explanation

Introduction to Business

Read Explanation

Financial Performance

Read Explanation

Business Development

Read Explanation

Insurance

Read Explanation

Family Business

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.