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A comparative balance sheet for Rocker Company appears below: ROCKER COMPANY Comparative Balance Sheet Dec
A comparative balance sheet for Rocker Company appears below:
| ROCKER COMPANY | ||
|---|---|---|
| Comparative Balance Sheet | ||
| Dec. 31, 2014 | Dec. 31, 2013 | |
| Assets | ||
| Cash | $34,000 | $11,000 |
| Accounts receivable | 18,000 | 13,000 |
| Inventory | 25,000 | 17,000 |
| Prepaid expenses | 6,000 | 9,000 |
| Long-term investments | 0 | 17,000 |
| Equipment | 60,000 | 33,000 |
| Accumulated depreciation-equipment | (20,000) | (15,000) |
| Total assets | $123,000 | $85,000 |
| Liabilities and Stockholder's Equity | ||
| Accounts payable | $17,000 | $7,000 |
| Bonds payable | 36,000 | 45,000 |
| Common stock | 40,000 | 23,000 |
| Retained earnings | 30,000 | 10,000 |
| Total liabilities and stockholders' equity | $123,000 | $85,000 |
Additional information:
1. Net income for the year ending December 31, 2014 was $35,000.
2. Cash dividends of $15,000 were declared and paid during the year.
3. Long-term investments that had a cost of $17,000 were sold for $14,000.
4. Sales for 2017 were $120,000.
Prepare a statement of cash flows for the year ended December 31, 2014 using indirect method.
Expert Solution
AmountNet Income$35,000Increase in Accounts Receivable(5,000)Increase in Inventory(8,000)Decrease in Prepaid Expense3,000Loss on Sale of Long-term Investments3,000Depreciation Expense5,000Increase in Accounts Payable7,000Decrease in Bonds Payable(9,000)Cash Flow from Operating Activities$31,000Decrease in Long-Term Investment17,000Increase in Equipment(27,000)Cash Flow From Investing Activities($10,000)Increase in Common Stock17,000Cash Dividends Paid(15,000)Cash Flow from Financing Activities$2,000Increase in Cash$23,000Add: Cash - Dec 31, 201311,000Cash - Dec 31, 2014$34,000
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