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

  1. 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 $294,260 $275,940
    Accounts receivable (net) 106,600 99,110
    Inventories 300,920 293,430
    Investments 0 113,680
    Land 154,350 0
    Equipment 332,020 259,420
    Accumulated depreciation—equipment (77,730) (69,960)
    Total assets $1,110,420 $971,620
    Liabilities and Stockholders' Equity
    Accounts payable $200,990 $191,410
    Accrued expenses payable 19,990 25,260
    Dividends payable 11,100 8,740
    Common stock, $10 par 59,960 47,610
    Paid-in capital: Excess of issue price over par-common stock 225,420 132,140
    Retained earnings 592,960 566,460
    Total liabilities and stockholders’ equity $1,110,420 $971,620

    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 $102,310 cash.
    4. The common stock was issued for cash.
    5. There was a $72,170 credit to Retained Earnings for net income.
    6. There was a $45,670 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

Merrick Equipment Co.

Statement of Cash Flows

For the Year Ended December 31, 20Y9

Cash flows from operating activities:

Net income

72170

Adjustments to reconcile net income to net cash flow from operating activities:

Depreciation (77730-69960)

7770

Loss on sale of investments (113680-102310)

11370

Change in current operating assets and liabilities:

Increase in accounts receivable (99110-106600)

(7490)

Increase in inventories (293430-300920)

(7490)

Increase in accounts payable (200990-191410)

9580

Decrease in accrued expenses payable (19990-25260)

(5270)

Net cash flow from operating activities

80640

Cash flows from investing activities:

Cash received from sale of investments

102310

Cash paid for purchase of land

(154350)

Cash paid for purchase of equipment (332020-259420)

(72600)

Net cash flow for investing activities

(124640)

Cash flows from financing activities:

Cash received from sale of common stock (59960+225420)-(47610+132140)

105630

Cash paid for dividends

(43310)

Net cash flow from financing activities

62320

Increase in cash

18320

Cash at the beginning of the year

275940

Cash at the end of the year

294260

ekkarill92 answered 2 years ago
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