Question 33 785The Statement of Cash Flows Problems Group ALearning Objectives 1, 2P14-32A Identifving the purpose and preparing the statement of cash flows-indirect methodAmerican Rare Coins (ARC) was formed on January 1, 2018. Additional data for theyear follow:2. Net Income $266,4004. Net Cash Used by Op.Act. S(48,000)a. On January 1, 2018, ARC issued no par common stock for $450,000.b. Early in January, ARC made the following cash payments:1. For store fixtures, $53,0002. For merchandise inventory, $340,0003. For rent expense on a store building, $20,000c. Later in the year, ARC purchased merchandise inventory on account for $239,000.Before year-end, ARC paid $139,000 of this accounts payable.d. During 2018, ARC sold 2,400 units of merchandise inventory for $275 each.Betore year-end, the company collected 85% of this amount. Cost of goodssold for the year was $250,000, and ending merchandise inventory totaled$329,000.e. The store employs three people. The combined annual payroll is $96,000, of whichARC still owes $3,000 at year-end.f. At the end of the year, ARC paid income tax of $17,000. There are no incometaxes payable.g. Late in 2018, ARC paid cash dividends of $44,000.h. For store fixtures, ARC uses the straight-line depreciation method, over five years,with zero residual value.Requirements1. What is the purpose of the statement of cash flows?2. Prepare ARC's income statement for the year ended December 31, 2018. Use thesingle-step format, with all revenues listed together and all expenses listed together.3. Prepare ARC's balance sheet at December 31, 2018.4. Prepare ARC's statement of cash flows using the indirect method for the yearended December 31, 2018.P14-33A Preparing the statement of cash flows-indirect methodLearning Objective 2Accountants for Morganson, Inc. have assembled the following data for the yearended December 31, 2018:Net Cash Used for Inv.Act. $(15,500)20182017Current Assets:Cash$ 99,400$ 25,000Accounts Receivable64,10069,700Merchandise Inventory83,00075,000Current Liabilities:Accounts Payable57,60055,200Income Tax Payable14,80016,800 784 chapter 14Transaction Data for 2018:$ 38,000Payment of notes payable$ 46,100$Issuance of common stock for çash50,00024,000Payment of cash dividendsDepreciation expenseIssuance of notes payable to borrow cash62,00074,000Purchase of equipment with cashGain on sale of building119,0004,500Acquisition of land by issuing long-term notes payable54,000Net income68,500Book value of building soldPrepare Morganson's statement of cash flows using the indirect method. Include anaccompanying schedule of non-cash investing and financing activities.Learning Objective 2P14-34A Preparing the statement of cash flows-indirect method withnon-cash transactionsThe 2018 income statement and comparative balance sheet of Rolling Hills, Inc.Net Cash Prov. by Op.Act. $125,100follow:ROLLING HILLS, INC.Income StatementYear Ended December 31, 2018Net Sales Revenue$ 440,000Cost of Goods Sold209,200Gross Profit230,800Operating Expenses:Salaries Expense$ 77,400Depreciation Expense-Plant AssetsOther Operating Expenses14,400Total Operating Expenses10,200Operating Income102,000Other Income and (Expenses):128 200Interort D

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Question 33 785The Statement of Cash Flows> Problems Group ALearning Objectives 1, 2P14-32A Identifving the purpose and preparing the statement of cash flows-indirect methodAmerican Rare Coins (ARC) was formed on January 1, 2018. Additional data for theyear follow:2. Net Income $266,4004. Net Cash Used by Op.Act. S(48,000)a. On January 1, 2018, ARC issued no par common stock for $450,000.b. Early in January, ARC made the following cash payments:1. For store fixtures, $53,0002. For merchandise inventory, $340,0003. For rent expense on a store building, $20,000c. Later in the year, ARC purchased merchandise inventory on account for $239,000.Before year-end, ARC paid $139,000 of this accounts payable.d. During 2018, ARC sold 2,400 units of merchandise inventory for $275 each.Betore year-end, the company collected 85% of this amount. Cost of goodssold for the year was $250,000, and ending merchandise inventory totaled$329,000.e. The store employs three people. The combined annual payroll is $96,000, of whichARC still owes $3,000 at year-end.f. At the end of the year, ARC paid income tax of $17,000. There are no incometaxes payable.g. Late in 2018, ARC paid cash dividends of $44,000.h. For store fixtures, ARC uses the straight-line depreciation method, over five years,with zero residual value.Requirements1. What is the purpose of the statement of cash flows?2. Prepare ARC's income statement for the year ended December 31, 2018. Use thesingle-step format, with all revenues listed together and all expenses listed together.3. Prepare ARC's balance sheet at December 31, 2018.4. Prepare ARC's statement of cash flows using the indirect method for the yearended December 31, 2018.P14-33A Preparing the statement of cash flows-indirect methodLearning Objective 2Accountants for Morganson, Inc. have assembled the following data for the yearended December 31, 2018:Net Cash Used for Inv.Act. $(15,500)20182017Current Assets:Cash$ 99,400$ 25,000Accounts Receivable64,10069,700Merchandise Inventory83,00075,000Current Liabilities:Accounts Payable57,60055,200Income Tax Payable14,80016,800 784 chapter 14Transaction Data for 2018:$ 38,000Payment of notes payable$ 46,100$Issuance of common stock for çash50,00024,000Payment of cash dividendsDepreciation expenseIssuance of notes payable to borrow cash62,00074,000Purchase of equipment with cashGain on sale of building119,0004,500Acquisition of land by issuing long-term notes payable54,000Net income68,500Book value of building soldPrepare Morganson's statement of cash flows using the indirect method. Include anaccompanying schedule of non-cash investing and financing activities.Learning Objective 2P14-34A Preparing the statement of cash flows-indirect method withnon-cash transactionsThe 2018 income statement and comparative balance sheet of Rolling Hills, Inc.Net Cash Prov. by Op.Act. $125,100follow:ROLLING HILLS, INC.Income StatementYear Ended December 31, 2018Net Sales Revenue$ 440,000Cost of Goods Sold209,200Gross Profit230,800Operating Expenses:Salaries Expense$ 77,400Depreciation Expense-Plant AssetsOther Operating Expenses14,400Total Operating Expenses10,200Operating Income102,000Other Income and (Expenses):128 200Interort D

Accepted Answer

1. schedule for changes in working capital

2018

2017

Increase/ Decrease

Accounts…