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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.

2016 Income statement 2017 Sales revenue Less: Costs of goods sold Gross profit less operating expenses: Salaries and wages expense depreciation expense other operating expenses Total operating expenses Operating income Plus other income and less other expenses: nterest expense Gain on sale of PP&E Total other income and expenses income before income taxes less: income tax expense net income Comparative Balance Sheets Current assets: Cash accounts receviable nventorY prepaid insurance Total current assets property, plant, and Equipment 2017 347,000 76,000 271,000 51,50020,500 2,30029,100 93,000 2,600 173,600 145,200 138,000 27,400 86,500 3,300 24,500 5,900 13,000 152,000 30,300 117,000 412,300 43,400 Less: accumulated depreciation 227,600 Investments Total assets 255,800 9,900 4,600 Liabilities 33,90036,500 7,300 5,300 Accounts payable 222,300 Wages payable 2,900 2,100 5,400 18,500 37,000 interest payable 185,300 income taxes payable other accrued expenses payable total current liabilities long term liabilities total liabilities 22,500 62,800 66,300 110,000 176,300 76,000 138,800 Stockholders equity Common stock retained earnings total stockholders equity 02,000 71, 171,500 273,500 8,500 79,500 total liabilities and equity 412,300 255,800

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