Required

a. Compute the change in cash that occurred in 201 9.

b. Prepare a 2019 statement of cash flows using the direct method. Use one cash outflow for "cash paid for

wages and other operating expenses." Accounts payable relate to inventory purchases only.

c. Prepare separate schedules showing ( I) a reconciliation of net income to net cash flow from operating

activities (see Exhibit B.3) and (2) noncash investing and financing transactions.

RAINBOW COMPANY Income Statement For Year Ended December 31, 2019 Sales..... Dividend income $750,000 15,000 765,000 Cost of goods sold .... Wages and other operating expenses Depreciation expense..... Patent amortization expense Interest expense..... Income tax expense. Loss on sale of equipment Gain on sale of investments... Net income... $440,000 130,000 39,000 7,000 13,000 44,000 5,000 (10,000) 668,000 $ 97,000 RAINBOW COMPANY Balance Sheet Dec. 31, 2019 Dec. 31, 2018 $ 19,000 40,000 103,000 10,000 As of Year End Assets Cash and cash equivalents Accounts receivable... Inventory..... Prepaid expenses. Investments-Available-for-sale. Land.... Buildings Accumulated depreciation-Buildings Equipment ..... Accumulated depreciation-Equipment. Patents ..... Total assets Liabilities and Stockholders' Equity Accounts payable. Interest payable Income tax payable Bonds payable .. Preferred stock ($100 par value) Common stock ($5 par value) ... Paid-in capital in excess of par value-Common. Retained earnings .... AOCI (unrealized gain on investments) Total liabilities and equity... 190,000 445,000 (91,000) 179,000 (42,000) 50,000 $903,000 $ 25,000 30,000 77.000 6,000 57,000 100,000 350,000 (75,000) 225,000 (46,000) 32,000 $781,000 $ 20,000 6,000 8,000 155,000 100,000 379,000 133,000 102,000 $ 16,000 5,000 10,000 125,000 75,000 364.000 124,000 55,000 7,000 $781,000 $903,000