ACCT. 502PaperFall 2019 The balance sheet accounts of Rockwall Corporation at the beginning and end of 2016 are:31-Dec-161-Jan-16Cash$99,435$110,700Accounts Receivable$424,600$380,900Inventory$635,740$576,475Prepaid Expenses$20,000$12,000Investment in subsidiary$200,000$0Held to Maturity Debt Securities$16,460$14,850Land$100,000$100,000Buildings$525,000$400,000Equipment$381,000$290,000Patents$86,000$70,000Trademarks$25,000$35,000Bond Discount and issue costs$1,165$6,075Total Debits$2,514,400$1,996,000Accounts payable$534,000$508,000Income Taxes payable$68,000$34,500Salaries and wages payable$73,500$12,900Allowance for doubtful accounts$25,000$23,000Accumulated depreciation - buildings$248,000$230,000Accumulated depreciation - equipment$160,000$103,000Long-term notes payable$75,000$75,000Bonds payable$400,000$300,000Premium on bonds payable$7,762$0Common stock$150,000$125,000Paid-in capital in excess of par-common stock$568,000$418,000Retained earnings$205,138$166,600Total credits$2,514,400$1,996,000You also have the following information:1.On November 1, 2016, 25,000 shares of $1 par stock were sold for $175,000.2.A patent was purchased for $31,0003.During the year, equipment that had a cost basis of $26,400 and on which there was accumulated depreciation of $5,800 was sold for $15,000. No other plant assets were sold during the year.ACCT. 502PaperFall 2019 The balance sheet accounts of Rockwall Corporation at the beginning and end of 2016 are:31-Dec-161-Jan-16Cash$99,435$110,700Accounts Receivable$424,600$380,900Inventory$635,740$576,475Prepaid Expenses$20,000$12,000Investment in subsidiary$200,000$0Held to Maturity Debt Securities$16,460$14,850Land$100,000$100,000Buildings$525,000$400,000Equipment$381,000$290,000Patents$86,000$70,000Trademarks$25,000$35,000Bond Discount and issue costs$1,165$6,075Total Debits$2,514,400$1,996,000Accounts payable$534,000$508,000Income Taxes payable$68,000$34,500Salaries and wages payable$73,500$12,900Allowance for doubtful accounts$25,000$23,000Accumulated depreciation - buildings$248,000$230,000Accumulated depreciation - equipment$160,000$103,000Long-term notes payable$75,000$75,000Bonds payable$400,000$300,000Premium on bonds payable$7,762$0Common stock$150,000$125,000Paid-in capital in excess of par-common stock$568,000$418,000Retained earnings$205,138$166,600Total credits$2,514,400$1,996,000You also have the following information:1.On November 1, 2016, 25,000 shares of $1 par stock were sold for $175,000.2.A patent was purchased for $31,0003.During the year, equipment that had a cost basis of $26,400 and on which there was accumulated depreciation of $5,800 was sold for $15,000. No other plant assets were sold during the year.4.The 10%, $300,000 40-year bonds were dated and issued on January 2, 2003. Interest was payable on June 30 and December 31. They were sold originally at 97. These bonds were retired at 101 plus accrued interest on May 31, 2016. 5.The 6%, $400,000 20-year bonds were dated January 1, 2016, and were sold on May 31 at 102 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,200.6.Rockwall Corporation acquired 60% control in Jones Company on January 2, 2016, for $146,000. The income statement of Jones Company for 2016 shows a net income of $90,000.7.Extraordinary repairs to buildings of $12,600 were charged to Accumulated Depreciation – Buildings.8.Interest paid in 2016 was $31,000 and income taxes paid were $38,000.9.Net income for the year totaled $76,538.Instructionsa)From the information given, prepare a statement of cash flows using the indirect method. The company uses straight-line amortization for bond interest.b)Using the details of your cash flow statement analyze the activities of Rockwall Corporation during 2016. Limit: 1 page double spaced with one inch margins.Due Date: Submit in a word document to the drop box by Monday, December 2.Font: Times New Roman 12 fon4.The 10%, $300,000 40-year bonds were dated and issued on January 2, 2003. Interest was payable on June 30 and December 31. They were sold originally at 97. These bonds were retired at 101 plus accrued interest on May 31, 2016. 5.The 6%, $400,000 20-year bonds were dated January 1, 2016, and were sold on May 31 at 102 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,200.6.Rockwall Corporation acquired 60% control in Jones Company on January 2, 2016, for $146,000. The income statement of Jones Company for 2016 shows a net income of $90,000.7.Extraordinary repairs to buildings of $12,600 were charged to Accumulated Depreciation – Buildings.8.Interest paid in 2016 was $31,000 and income taxes paid were $38,000.9.Net income for the year totaled $76,538.Instructionsa)From the information given, prepare a statement of cash flows using the indirect method. The company uses straight-line amortization for bond interest.b)Using the details of your cash flow statement analyze the activities of Rockwall Corporation during 2016. Limit: 1 page double spaced with one inch margins.Due Date: Submit in a word document to the drop box by Monday, December 2.Font: Times New Roman 12 fon