Question

The 2017 and 2016 balance sheets of Rabb Corporation follow. The 2017 income statement is also provided. Rabb had no noncash investing and financing transactions during 2017. During the​ year, the company sold equipment for $15,100​, which had originally cost $13,500 and had a book value of $10,500. The company did not issue any notes payable during the year but did issue common stock for $31,000. The company purchased plant assets and​ long-term investments with cash.
Requirements
1. Prepare the statement of cash flows for RabbRabb Corporation for 20172017 using the indirect method.
2. Evaluate the​ company's cash flows for the year. Discuss each of the categories of cash flows in your response.

Answer 1

Answer:

I looked for the missing information (IS & BS) since the information was missing

Statement of cash flows

Cash flows from operating activities:

Net income                            $183,500

Adjustments to new income

Depreciation $5,900

Gain on sale of equipment ($4,600)

Increase in accounts receivable ($3,200)

Decrease in inventory $6,500

Increase in prepaid insurance ($700)

Decrease in account payable ($2,600)

Decrease in wages payable ($4,400)

Increase in interest payable $2,100

Increase in taxes payable $5,400

Decrease in accrued expenses payable ($4,000)

Total cash flow provided by operating activities $183,900

Cash flow from investing activities:

Cash provided by sale of equipment $15,100

Cash paid for investments ($117,000)

Cash paid for P, P & E ($27,500)

Total cash flow from investing activities ($129,400)

Cash flow from financing activities:

Cash paid for long term debt ($34,000)

Dividends paid ($22,300)

Common stocks issued $31,000

Total cash flow from financing activities ($25,300)

Net increase in cash $29,200

Beginning cash balance $20,500

Ending cash balance $49,700