Question

The comparative balance sheet of Merrick Equipment Co. for December 31, 2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$70,720.00	$47,940.00
4	Accounts receivable (net)	207,230.00	188,190.00
5	Inventories	298,520.00	289,850.00
6	Investments	0.00	102,000.00
7	Land	295,800.00	0.00
8	Equipment	438,600.00	358,020.00
9	Accumulated depreciation-equipment	(99,110.00)	(84,320.00)
10	Total assets	$1,211,760.00	$901,680.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$205,700.00	$194,140.00
13	Accrued expenses payable (operating expenses)	30,600.00	26,860.00
14	Dividends payable	25,500.00	20,400.00
15	Common stock, $1 par	202,000.00	102,000.00
16	Paid-in capital: Excess of issue price over par—common stock	354,000.00	204,000.00
17	Retained earnings	393,960.00	354,280.00
18	Total liabilities and stockholders’ equity	$1,211,760.00	$901,680.00

Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:

A.	Equipment and land were acquired for cash.
B.	There were no disposals of equipment during the year.
C.	The investments were sold for $91,800 cash.
D.	The common stock was issued for cash.
E.	There was a $141,680 credit to Retained Earnings for net income.
F.	There was a $102,000 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.

Labels and Amount Descriptions
Cash paid for dividends
Cash paid for merchandise
Cash paid for purchase of equipment
Cash paid for purchase of land
Cash received from customers
Cash received from sale of common stock
Cash received from sale of investments
December 31, 2016
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued expenses payable
Decrease in cash
Decrease in inventories
Depreciation
For the Year Ended December 31, 2016
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in accrued expenses payable
Increase in cash
Increase in inventories
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities The section of the statement of cash flows that reports the cash transactions affecting the determination of net income. . Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section. Question not attempted. Score: 161/178 Merrick Equipment Co. Statement of Cash Flows ? For the Year Ended December 31, 2016 1 Cash flows from operating activities: 2 ? ? 3 Adjustments to reconcile net income to net cash flow from operating activities: 4 ? ? 5 ? ? 6 Changes in current operating assets and liabilities: 7 ? ? 8 ? ? 9 ? ? 10 ? Increase in accrued expenses payable ? 11 ? Net cash flow from operating activities ? 12 13 Cash flows from investing activities: 14 ? Cash received from sale of investments ? 15 ? ? 16 ? ? 17 Net cash flow from investing activities 18 19 Cash flows from financing activities: 20 ? Cash received from sale of common stock ? 21 ? ? 22 ? Net cash flow from financing activities ? 23 ? 24 Cash at the beginning of the year ? 25 Cash at the end of the year

Answer 1

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 2016
1	Cash flows from operating activities:
2	Net Income	141680
3	Adjustments to reconcile net income to net cash flow from operating activities:
4	Depreciation (99110-84320)	14790
5	Loss on sale of investments	10200
6	Changes in current operating assets and liabilities:
7	Increase in Account receivable	-19040
8	Increase in Invetories	-8670
9	Increase in Account payab;e	11560
10	Increase in accrued expenses payable	3740
11	Net cash flow from operating activities		154260
12
13	Cash flows from investing activities:
14	Cash received from sale of investments	91800
15	Cash paid for purchase of land	-295800
16	Cash paid for purchase of equipment	-80580
17	Net cash flow from investing activities		-284580
18
19	Cash flows from financing activities:
20	Cash received from sale of common stock (204000+3548280-354000-393960)	250000
21	cash Dividend Paid ((-25500+102000+20400))	-96900
22	Net cash flow from financing activities		153100
23	Increase in Cash		22780
24	Cash at the beginning of the year		47940
25	Cash at the end of the year		70720