Rojas Corporation\'s comparative balance sheets are presented below. ROJAS CORPO

Question

Rojas Corporation's comparative balance sheets are presented below. ROJAS CORPORATION Comparative Balance Sheets December 31 2017 2016 Cash Accounts receivable Land Buildings Accumulated depreciation-buildings $14,300 $10,700 21,200 20,000 70,000 (15,000) 23,400 26,000 70,000 (10,000) Total $110,500 $120,100 Accounts payable Common stock Retained earnings $12,370 $31,100 69,000 20,000 $110,500 $120,100 75,000 23,130 Total Additional information: 1. Net income was $22,630. Dividends declared and paid were $19,500. 2. No noncash investing and financing activities occurred during 2017 3. The land was sold for cash of $4,900. Prepare a statement of cash flows for 2017 using the indirect method. (Show amour sign e.g. -15,000, or in parenthesis e.g. (15,000).) ROJAS CORPORATION

Explanation / Answer

Rojas Corporation

Statement of cash flows

For the year ended December 31, 2017

Free cash flows = Operating cash flow - Capital expenditures

= 12,200 - ( - 4,900)

= $17,100

I. Cash flows from operating activities Net income for the current year 22,630 Add: Adjustments for: Depreciation 5,000 Loss on sale of land 1,100 Operating profits before working capital changes Add: Decrease in accounts receivable 2,200 Less: Decrease in accounts payable (18,730) Net cash flows from operating activities 12,200 II. Cash flows from investing activities Sale of Land 4,900 Net cash flows from investing activities 4,900 III. Cash flows from Financing Activities Dividend paid (19,500) Issue of common stock 6,000 Net cash used in Financing Activities (13,500) Net increase in cash (I + II + III) 3,600 Add: Opening balance of cash 10,700 Closing balance of cash 14,300

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