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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 $222,710 $208,610
Accounts receivable (net) 80,680 74,920
Inventories 227,760 221,840
Investments 0 85,940
Land 116,820 0
Equipment 251,290 196,120
Accumulated depreciation—equipment (58,830) (52,890)
Total assets $840,430 $734,540
Liabilities and Stockholders' Equity
Accounts payable $152,120 $144,700
Accrued expenses payable 15,130 19,100
Dividends payable 8,400 6,610
Common stock, $10 par 45,380 35,990
Paid-in capital: Excess of issue price over par-common stock 170,610 99,900
Retained earnings 448,790 428,240
Total liabilities and stockholders’ equity $840,430 $734,540

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 $77,350 cash.

The common stock was issued for cash.

There was a $55,070 credit to Retained Earnings for net income.

There was a $34,520 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

Statement of Cash Flow
Particulars Amount Total Amount
Cash flow from operating activities
Income            55,070.00
Loss on sale of invt              8,590.00
Depreciation              5,940.00
Increase in AR            (5,760.00)
Increase in inventory            (5,920.00)
Increase in AP              7,420.00
Decrease in Accrued expenses            (3,970.00)
Cash flow from operating activities                 61,370.00
Cash flow from Investing activities
Sale of invt            77,350.00
Purchase of PPE         (55,170.00)
Purchase of land       (116,820.00)
Cash flow from Investing activities               (94,640.00)
Cash flow from Financing activities
Issue of Stock              9,390.00
Issue of additional Paid in capital            70,710.00
Dividends Paid = 34520 -1790         (32,730.00)
Cash flow from Financing activities                 47,370.00
net change in cash and cash equivalents                 14,100.00
Opening cash and cash equivalents               208,610.00
Closing cash and cash equivalents               222,710.00

ekkarill92 answered 1 year ago
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