PB34A Requirements 1 Prepare the 2018 statement of cash flow

PB-34A 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? Solution: Requirement 1 ROLLING HILLS, INC. Statement of Cash Flows Year Ended December 31, 2018

Solution

1.

ROLLING HILLS, INC.

Statement of Cash Flow

Year Ended December 31,2018

a. Plant Assets

b. Accumulated Depreciation - Plant Assets

c. Retained Earnings

d.    Notes Payable

2. With this information, I will be able to evaluate an investment because I can see the cash receipts and cash payments for a specific period. This information could help me to predict the future cash flows, evaluate management decisions and the ability of the company to pay their debts and dividends.

ROLLING HILLS, INC. Statement of Cash Flow Year Ended December 31,2018
Cash Flows from Operating Activities:
Net income		$ 96,400
Adjustments to reconcile net income to Net cash
Provided by Operating activities:
Depreciation expense	$ 14,400
Increase in Accounts receivable	(1,100)
Decrease in merchandise inventory	11,700
Increase in Accounts payable	5,300
Decrease in accrued liabilities	(1,600)	28,700
Net cash provided by Operating Activities		125,100
Cash Flow from Investing Activities:
Purchase of Plant (Note a)	$(23,600)
Net cash Used for Investing Activities		(23,600)
Cash Flow from Financing Activities:
Issue of common stock	$ 24,400
Redemption of Notes payable (Note d)	(50,100)
Payment of Dividend (Note c)	(64,600)
Net Cash used for Financing Activities		(90,300)
Net Increase (Decrease) in Cash		11,200
Cash Balance, December 31,2017		15,700
Cash Balance, December 32,2018		26,900
Non-Cash Investing and Financing Activities:
Acquisition of Land by issue of note payable		$ 21,100