use the rolling hills data from problem 14 27a requirements 1 243369

Preparing the statement of cash flows—direct method with noncash transactions The 2012 comparative balance sheet and income statement of Rolling Hills, Inc., follow:

ROLLING HILLS, INC.
Comparative Balance Sheet
December 31, 2012 and 2011

 

2012

2011

Increase
(Decrease)

Current assets:

 

   

Cash and cash equivalents

$ 26,400

$ 15,900

$ 10,500

Accounts receivable

26,700

25,500

1,200

Inventories

79,800

91,700

(11,900)

Plant assets:

 

   

Land

34,600

11,000

23,600

Equipment, net

103,900

89,700

14,200

Total assets

$ 271,400

$ 233,800

$ 37,600

Current liabilities:

 

   

Accounts payable

$ 35,500

$ 30,600

$ 4,900

Accrued liabilities

28,600

30,700

(2,100)

Long-term liabilities:

 

 

 

Notes payable

78,000

101,000

(23,000)

Stockholders’ equity:

 

 

 

Common stock

88,800

64,900

23,900

Retained earnings

40,500

6,600

33,900

Total liabilities and stockholders’ equity

$ 271,400

$ 233,800

$ 37,600

 

ROLLING HILLS, INC.

Income Statement

Year Ended December 31, 2012

Revenues:

 

 

Sales revenue

 

$ 436,000

Interest revenue

 

8,000

Total revenues

 

444,000

Expenses:

 

 

Cost of goods sold

$ 202,200

 

Salary expense

78,400

 

Depreciation expense

14,400

 

Other operating expense

10,200

 

Interest expense

21,900

 

Income tax expense

19,100

 

Total expenses

 

346,200

Net income

 

$97,800

Additionally, Rolling Hills purchased land of $23,600 by financing it 100% with long-term notes payable during 2012. During the year, there were no sales of land or equipment, no additional issuances of notes payable, no retirements of stock, and no treasury stock transactions.

Requirements

1. Prepare the 2012 statement of cash flows by the direct method.
2. How will what you learned in this problem help you evaluate an investment?

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