The 2014 comparative balance sheet and income statement of Riverbend Pools Inc. follow. Riverbend had no non-cash investing and financing transactions during 2014. During the year, there were no sales of land or equipment, no issuances of notes payable, and no share repurchase transactions.

Requirements
1. Prepare the 2014 statement of cash flows by using the direct method.
2. How will what you learned in this problem help you evaluate an investment?

Transcribed Image Text:

Riverbend Pools Inc. Comparative Balance Sheet As at December 31, 2014 and 2013 Increase 2014 2013 (Decrease) Current assets: Cash and cash equivalents Accounts receivable Inventories Prepaid expenses $ 28,700 15,600 44,000 89,900 2,200 47,100 94,300 1,700 $13,100 3,100 4,400 (500) Property, plant, and equipment: Land 10,000 93,700 $307,800 $255,400 35,100 100,900 25,100 7,200 $52,400 Equipment, n Total assets Current liabilities: Accounts payable Salary payable Other accrued liabilities $ 22,700 24,600 1,400 22,500 2,100 24,400 $ (1,900) 700 1,900 Long-term liabilities: Notes payable 55,000 65,000 (10,000) Shareholders' equity: Common s 131,100 72,500 $307,800 122,300 19,600 $255,400 8,800 52,900 $52,400 Retained earnings Total liabilities and shareholders' equity Riverbend Pools Inc. Income Statement For the year ended December 31, 2014 Revenues Sales revenue $438,000 11,700 449,700 Interest revenue Total revenues Expenses: Cost of goods sold Salary expense Depreciation expense Other operating expe Interest expense Income tax expense $185,200 76,400 15,300 49,700 24,600 16,900 Total expense 368,100 $ 81,600 Net income