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In: Accounting

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

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 $302,680 $279,940
Accounts receivable (net) 109,650 100,540
Inventories 309,540 297,690
Investments 0 115,330
Land 158,760 0
Equipment 341,510 263,180
Accumulated depreciation—equipment (79,950) (70,970)
Total assets $1,142,190 $985,710
Liabilities and Stockholders' Equity
Accounts payable $206,740 $194,180
Accrued expenses payable 20,560 25,630
Dividends payable 11,420 8,870
Common stock, $10 par 61,680 48,300
Paid-in capital: Excess of issue price over par-common stock 231,860 134,060
Retained earnings 609,930 574,670
Total liabilities and stockholders’ equity $1,142,190 $985,710

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 $103,800 cash.
  4. The common stock was issued for cash.
  5. There was a $81,590 credit to Retained Earnings for net income.
  6. There was a $46,330 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

Cash flows from operating activities:
Net income 81590
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation 8980
Loss on sale of investments 11530
Changes in current operating assets and liabilities:
Increase in accounts receivable -9110
Increase in inventories -11850
Increase in accounts payable 12560
Increase in accrued expenses payable -5070
Net cash flow from operating activities 88630
Cash flows from investing activities:
Cash received from sale of investments 103800
Cash paid for purchase of land -158760
Cash paid for purchase of equipment -78330
Net cash flow used for investing activities -133290
Cash flows from financing activities:
Cash from sale of common stock 111180
Cash paid for dividends -43780
Net cash flow from financing activities 67400
Increase in cash 22740
Cash at the beginning of the year 279940
Cash at the end of the year 302680

ekkarill92 answered 4 months ago
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