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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 $316,210 $294,490 Accounts receivable (net) 114,550 105,770 Inventories 323,360 313,140 Investments 0 121,320 Land 165,860 0 Equipment 356,780 276,860 Accumulated depreciation—equipment (83,530) (74,660) Total assets $1,193,230 $1,036,920 Liabilities and Stockholders' Equity Accounts payable $215,970 $204,270 Accrued expenses payable 21,480 26,960 Dividends payable 11,930 9,330 Common stock, $10 par 64,430 50,810 Paid-in capital: Excess of issue price over par-common stock 242,230 141,020 Retained earnings 637,190 604,530 Total liabilities and stockholders’ equity $1,193,230 $1,036,920 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 $109,190 cash. The common stock was issued for cash. There was a $81,400 credit to Retained Earnings for net income. There was a $48,740 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: Net income $ Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Loss on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable 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

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Expert Solution

A Cash flow statement provides the following information:
1) Information about company's cash receipt and cash payment during an accounting period.
2) Information about company's operating, investing and financing activities.
3) Information access the company's liquidity, solvency and financing flexibility.
Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from transactions that affect a firm's net income.
Cash flow from investing activities (CFI) consists of the inflow and outflows of cash resulting from the acquisition of long term assets and investment.
Cash Flow from financing activities (CFF) consists of the inflow and outflows of cash resulting from transactions affecting a firm's capital structure.

ekkarill92 answered 2 years ago
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