Use the Rolling Hills data from Problem.

In Problem, the 2015 income statement and comparative balance sheet of Rolling Hills, Inc. follow:

Additionally, Rolling Hills purchased land of $ 23,600 by financing it 100% with long- term notes payable during 2015. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $ 0. The cost and the accumulated depreciation of the disposed ­asset was $ 11,560. 

ROLLING HILLS, INC.

Comparative Balance Sheet

December 31, 2015 and 2014

Requirements 

1. Prepare the 2015 statement of cash flows by the direct method. 

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

Transcribed Image Text:

ROLLING HILLS, INC. Income Statement Year Ended December 31, 2015 Sales Revenue $ 436,000 Cost of Goods Sold 202,200 Gross Profit 233,800 Operating Expenses: Salaries Expense $ 78,400 Depreciation Expense-Plant Assets 14,400 esm Other Operating Expenses 10,200 Total Operating Expenses 103,000 Operating Income 130,800 Other Revenues and (Expenses): Interest Revenue 8,000 Interest Expense (21,900) Total Other Revenues and (Expenses) (13,900) Net Income Before Income Taxes 116,900 Income Tax Expense 19,100 Net Income S 97,800