Statement of Cash Flows—Indirect Method The comparative balance sheet of Merrick Equipment Co. for December 31,...

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:

		Dec. 31, 20Y9	Dec. 31, 20Y8
Assets
Cash		$300,740	$278,470
Accounts receivable (net)		108,950	100,010
Inventories		307,540	296,120
Investments		0	114,720
Land		157,750	0
Equipment		339,320	261,800
Accumulated depreciation—equipment		(79,440)	(70,600)
	Total assets	$1,134,860	$980,520

Liabilities and Stockholders' Equity
Accounts payable		$205,410	$193,160
Accrued expenses payable		20,430	25,490
Dividends payable		11,350	8,820
Common stock, $10 par		61,280	48,050
Paid-in capital: Excess of issue price over par-common stock		230,380	133,350
Retained earnings		606,010	571,650
	Total liabilities and stockholders’ equity	$1,134,860	$980,520

Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:

Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The investments were sold for $103,250 cash.
The common stock was issued for cash.
There was a $80,440 credit to Retained Earnings for net income.
There was a $46,080 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
	$
Adjustments to reconcile net income to net cash flow from operating activities:


Changes in current operating assets and liabilities:




Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
	$


Net cash flow used for investing activities
Cash flows from (used for) financing activities:


Net cash flow from financing activities
		$
Cash at the beginning of the year
Cash at the end of the year		$

Solutions

Expert Solution

Merrick Equipment Co.
Statement of Cash Flows
Year Ended December 31, 20Y9
Cash flows from operating activities:
Net Income	80,440
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	8,840
Loss on sale of investment	11,470
Changes in current operating assets and liabilities:
Increase in accounts receivable (net)	(8,940)
Increase in inventories	(11,420)
Increase in accounts payable	12,250
Decrease in accrued expenses payable	(5,060)
Net cash flow from operating activities		87,580
Cash flows from investing activities:
Purchase of equipment	(77,520)
Purchase of land	(157,750)
Sale of investment	103,250
Net cash flow used for investing activities		(132,020)
Cash flows from financing activities:
Issuance of common stock	110,260
Payment of cash dividends	(43,550)
Net cash flow from financing activities		66,710
Net increase (decrease) in cash		22,270
Cash at the beginning of the year		278,470
Cash at the end of the year		300,740

ekkarill92 answered 1 year ago

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