Question

Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.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		$284,360		$265,430
Accounts receivable (net)		103,010		95,330
Inventories		290,800		282,260
Investments		0		109,350
Land		149,150		0
Equipment		320,840		249,550
Accumulated depreciation—equipment		(75,110)		(67,290)
	Total assets	$1,073,050		$934,630
Liabilities and Stockholders' Equity
Accounts payable		$194,220		$184,120
Accrued expenses payable		19,310		24,300
Dividends payable		10,730		8,410
Common stock, $10 par		57,940		45,800
Paid-in capital: Excess of issue price over par-common stock		217,830		127,110
Retained earnings		573,020		544,890
	Total liabilities and stockholders’ equity	$1,073,050		$934,630

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

1. Equipment and land were acquired for cash.
2. There were no disposals of equipment during the year.
3. The investments were sold for $98,420 cash.
4. The common stock was issued for cash.
5. There was a $72,060 credit to Retained Earnings for net income.
6. There was a $43,930 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.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:
Cash used for dividends Cash paid for land Cash from sale of investments Cash from sale of common stock Loss on sale of investments Net income	$
Adjustments to reconcile net income to net cash flow from operating activities:
Accumulated depreciation Cash paid for land Cash used for dividends Cash from sale of common stock Depreciation Retained earnings
Cash used for dividends Cash received from the sale of common stock Cash received from net income Gain on sale of investments Loss on sale of investments Retained earnings
Changes in current operating assets and liabilities:
Decrease in accounts receivable Decrease in accounts payable Decrease in inventories Depreciation Increase in accounts receivable Loss on sale of investments
Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Gain on sale of investments Increase in accrued expenses Increase in inventories
Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in accounts payable Increase in accrued expenses Loss on sale of investments
Decrease in accounts payable Decrease in accrued expenses payable Decrease in dividends payable Depreciation Increase in accrued expenses payable Increase in land
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
Cash received from gain on sale of investments Cash received from loss on sale of investments Cash received from net income Cash from sale of common stock Cash from sale of investments Cash received from retained earnings	$
Cash paid for accounts payable Cash paid for accumulated depreciation Cash paid for common stock Cash paid for depreciation Cash used for dividends Cash used for purchase of land
Cash paid for accounts receivable Cash paid for accrued expenses Cash paid for accumulated depreciation Cash paid for inventories Cash used for purchase of equipment Cash paid for retained earnings
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Cash received from net income Cash from sale of common stock Cash received from sale of equipment Cash received from sale of inventories Cash from sale of investments Cash received from retained earnings
Cash used for dividends Cash paid for inventories Cash used for purchase of equipment Cash paid for purchase of investments Cash used for purchase of land Cash paid for retained earnings
Net cash flow from financing activities
Decrease in cash Increase in cash		$
Cash at the beginning of the year
Cash at the end of the year		$

Answer 1