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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, 20Y9Dec. 31, 20Y8

Assets  

Cash$307,670 $286,870

Accounts receivable (net)111,460 103,030

Inventories314,640 305,050

Investments0 118,180

Land161,380 0

Equipment347,150 269,700

Accumulated depreciation—equipment(81,270) (72,730)

Total assets$1,161,030 $1,010,100

   

Liabilities and Stockholders' Equity  

Accounts payable (merchandise creditors)$210,150 $198,990

Accrued expenses payable (operating expenses)20,900 26,260

Dividends payable11,610 9,090

Common stock, $10 par62,700 49,490

Paid-in capital in excess of par—common stock235,690 137,370

Retained earnings619,980 588,900

Total liabilities and stockholders’ equity$1,161,030 $1,010,100

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 $138,270 cash.

The common stock was issued for cash.

There was a $78,550 credit to Retained Earnings for net income.

There was a $47,470 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 (used for) 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 balance, January 1, 20Y9

Cash balance, December 31, 20Y9 $

Solutions

Expert Solution

Solution:

Merrick Equipment Co
Statement of Cash Flows
For the year ended Dec 31, 20Y9
Particulars Details Amount
Cash Flow from Operating Activities:
Net Income $78,550.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense ($81,270 - $72,730) $8,540.00
Gain on sale of investment ($138,270 - $118,180) -$20,090.00
Increase in accounts receivables ($111,460 - $103,030) -$8,430.00
Increase in inventories ($314,640 - $305,050) -$9,590.00
Increase in accounts payable ($210,150 - $198,990) $11,160.00
Decrease in accured expenses payable ($26,260 - $20,900) -$5,360.00
Net Cash provided by (used in) operating activities $54,780.00
Cash Flow from Investing Activities:
Purchase of land -$161,380.00
Purchase of equipment -$77,450.00
Proceed from sale of investments $138,270.00
Net Cash Provided by (used in) Investing activities -$100,560.00
Cash Flow from Financing Activities:
Issuance of common stock for cash ($62,700 + $235,690 - $49,490 - $137,370) $111,530.00
Payment of cash dividend ($9,090 + $47,470 - $11,610) -$44,950.00
Net Cash Provided by (used in) financing activities $66,580.00
Net Increase / (Decrease) in Cash $20,800.00
Cash balance at beginning of year $286,870.00
Cash balance at end of year $307,670.00

ekkarill92 answered 1 year ago
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