34A

P16-34A Preparing the statement of cash flows-indirect method with Learning Objective 2 non-cash transactions The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. Net Cash Prov. by Op. Act. $125,100 follow: ROLLING HILLS, INC. Income Statement Year Ended December 31, 2018 Net Sales Revenue $ 440,000 Cost of Goods Sold 209,200 Gross Profit 230,800 Operating Expenses: Salaries Expense $ 77,400 Depreciation Expense-Plant Assets 14,400 Other Operating Expenses 10,200 Total Operating Expenses 102,000 Operating Income 128,800 Other Income and (Expenses): Interest Revenue 8,700 Interest Expense (21,100) Total Other Income and (Expenses) (12,400) Net Income Before Income Taxes 116,400 Income Tax Expense 20,000 $ 96,400 Net Income ROLLING HILLS, INC. Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Assets Current Assets: $ 15,700 $ 26,900 26,500 Cash 25,400 Accounts Receivable 79,800 91,500 Merchandise Inventory Long-term Assets: Land 35,100 14,000 124,840 114,650 Plant Assets (18,940) (17,950) Accumulated Depreciation-Plant Assets $ 274,200 $ 243,300 Total Assets Liabilities Current Liabilities: $ 35,700 $ 30,400 Accounts Payable Accrued Liabilities 28,700 30,300 Long-term Liabilities: Notes Payable 79,000 108,000 Total Liabilities 143,400 168,700 Stockholders' Equity Common Stock, no par 88,900 64,500 Retained Earnings 41,900 10,100 Total Stockholders' Equity 130,800 74,600 Total Liabilities and Stockholders' Equity $ 274,200 $ 243,300 Additionally, Rolling Hills purchased land of $21,100 by financing it 100% with long- term notes payable during 2018. 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 $13,410. The plant acquisition was for cash. 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 cvaluate an investmene