Refer to the data for Rainbow Company in Problem 4-52.

Data from  4-52:

REQUIRED:

a. Compute the change in cash that occurred in 2018.

b. Prepare a 2018 statement of cash flows using the direct method. Use one cash outflow for "cash paid for wages and other operating expenses." Accounts payable re late to inventory purchases only.

c. Prepare separate schedules showing (1) a reconciliation of net income to net cash flow from operating activities and (2) noncash investing and financing transactions.

Transcribed Image Text:

RAINBOW COMPANY Income Statement For Year Ended December 31, 2018 Sales. .. $750,000 Dividend income.. 15.000 Total revenue Cost of goods sold. Wages and olher operating expenses Depreciation expense.... Patent amortization expense Interest expense. Income tax expense Loss on sale of equipment 765,000 $440,000 130,000 39,000 7.000 13,000 44,000 5,000 (3,000) Gain on sale of investments. 675,000 Net income. S 90,000 RAINBOW COMPANY Balance Sheets Dec. 31, 2018 Dec. 31, 2017 Assets $ 19,000 40,000 103,000 10,000 $ 25,000 30,000 77,000 6,000 57,000 100,000 350,000 (75,000) 225,000 (46,000) 32,000 Cash and cash equivalents Accounts receivable.. Inventory... Prepaid expenses. Long-term investments. Land Buildings. Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Patents.... 190,000 445,000 (91,000) 179,000 (42,000) 50,000 Total assets $903,000 $781,000 Liabilities and Stockholders' Equity Accounts payable. Interest payable Income tax payable Bonds payable. Preferred stock ($100 par value) Common slock ($5 par value) Paid-in capital in excess of par value common Relained earmings. $ 20,000 6,000 8,000 155,000 100,000 379,000 133,000 102,000 $ 16,000 5,000 10,000 125,000 75,000 364,000 124,000 62,000 Total liabilities and equity $903,000 $781,000 .... ....