Question

The

20162016

income statement and comparative balance sheet of

Granite RockGranite Rock?,

Inc.? follow:

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?(Click the icon to view the income? statement.)

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?(Click the icon to view the comparative balance? sheet.)                                         

?Additionally,

Granite RockGranite Rock

purchased land of

$ 19 comma 600$19,600

by financing it? 100% with? long-term notes payable during

20162016.

During the? year, there were no sales of? land, no retirements of? stock, and no treasury stock transactions. A plant asset was disposed of for? $0. The cost and accumulated depreciation of the disposed asset was

$ 11 comma 340$11,340.

The plant acquisition was for cash.

Requirements

1.

Prepare the 20162016 statement of cash flows by the direct method.

2.

How will what you learned in this problem help you evaluate an? investment? Granite Rock, Inc. Income Statement Year Ended December 31, 2016 Sales Revenue $437,000 Cost of Goods Sold 200,200 Gross Profit 236,800 Operating Expenses: Salaries Expense $77,400 Depreciation Expense—Plant Assets 14,800 Other Operating Expenses 11,000 Total Operating Expenses 103,200 Operating Income 133,600 Other Revenues and (Expenses): Interest Revenue 8,700 Interest Expense (21,500) Total Other Revenues and (Expenses) (12,800) Net Income Before Income Taxes 120,800 Income Tax Expense 19,600 Net Income $101,200

Granite Rock, Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
		2016	2015
Assets
Current Assets:
Cash		$26,700	$15,000
Accounts Receivable		26,800	25,000
Merchandise Inventory		79,300	91,000
Long-term Assets:
Plant Assets		125,180	105,520
Accumulated Depreciation—Plant Assets		(21,280)	(17,820)
Land		34,600	15,000
Total Assets		$271,300	$233,700
Liabilities
Current Liabilities:
Accounts Payable		$35,500	$30,700
Accrued Liabilities		28,000	30,400
Long-term Liabilities:
Notes Payable		79,000	102,000
Total Liabilities		142,500	163,100
Stockholders' Equity
Common Stock, no par		88,300	64,100
Retained Earnings		40,500	6,500
Total Stockholders' Equity		128,800	70,600
Total Liabilities and Stockholders' Equity		$271,300	$233,700

Requirement 1. Prepare the

20162016

Statement of Cash Flows by the direct method. ?(Use parentheses or a minus sign for numbers to be subtracted. If a box is not used in the? statement, leave the box? empty; do not select a label or enter a? zero.)

Complete the statement one section at a? time, beginning with the cash flows from operating activities.

	Granite Rock, Inc.
	Statement of Cash Flows
	Year Ended December 31, 2016
	Cash Flows from Operating Activities:
	Receipts:
	Total Cash Receipts
	Payments:
	Total Cash Payments
	Net Cash Provided by (Used for) Operating Activities

	Cash Flows from Investing Activities:
	Net Cash Provided by (Used for) Investing Activities

	Cash Flows from Financing Activities:
	Net Cash Provided by (Used for) Financing Activities

	Net Increase (Decrease) in Cash
	Cash Balance, December 31, 2015
	Cash Balance, December 31, 2016

	Non-cash Investing and Financing Activities:
	Total Non-cash Investing and Financing Activities

Requirement 2. How will what you learned in this problem help you evaluate an? investment?

A.

Learn how operating? activities, investing? activities, and financing activities generate cash receipts and cash payments

B.

Learn how to predict future cash? flows, evaluate management? decisions, and predict the ability of the company to pay their debts and dividends

C.

Both A and B

D.

None of the above

Answer 1

Cash flow for operating activities under direct method
Cash receipts from customers
Opening Accounts receivable				25000
Add : Sales				437000
Less : Closing accounts receivable				26800	435200
Payment made to suppliers
Ending Inventory				79300
Add : cost of goods sold				200200
Less : Beginning Inventory				91000
Inventory purchased				188500
Add : Beginning Accounts payable				30700
Less : Ending Accounts Payable				35500	-183700
Operating expenses paid
Salaries expenses				77400
Other operating expenses				11000
Income tax expense				19600
Less: Closing accrued expenses				28000
Add : Opening accrued expenses				30400	-110400
	Cash flows from operating activities				141100
Cash flow from Financing activities
Interest expense paid					-21500
Notes payable repaid					-42600
Payment of Dividends(hidden adjustment)					-67200
Receipt from issaunce of stock					24200
	Cash flow from Financing activities				-107100
Cash flow from Investing activities
Interest Revenue					8700
Payment for purchase of plant asset					-31000
	Cash flow from Investing activities				-22300
Net Cash flows					11700
Add : beginning cash balance					15000
Ending cash balance					26700
					26700
Non-Cash Investing and financing activities
Land purchase					19600
Issuance of Notes payable
Total Non cash Investing and financing activities					19600