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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 $293,310 $275,050
Accounts receivable (net) 106,260 98,790
Inventories 299,950 292,480
Investments 0 113,310
Land 153,850 0
Equipment 330,950 258,590
Accumulated depreciation—equipment (77,480) (69,730)
Total assets $1,106,840 $968,490
Liabilities and Stockholders' Equity
Accounts payable $200,340 $190,790
Accrued expenses payable 19,920 25,180
Dividends payable 11,070 8,720
Common stock, $10 par 59,770 47,460
Paid-in capital: Excess of issue price over par-common stock 224,690 131,710
Retained earnings 591,050 564,630
Total liabilities and stockholders’ equity $1,106,840 $968,490

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 $101,980 cash.

The common stock was issued for cash.

There was a $71,940 credit to Retained Earnings for net income.

There was a $45,520 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 out flows, 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

CASH FLOW STATEMENT
Cash flows from operating activities $         71,940.00
Net income
Adjustments for:
Depreciation and amortization $           7,750.00
Loss on sale of investment [113310-101980] $         11,330.00
Increase in trade receivables $         (7,470.00)
Increase in inventories $         (7,470.00)
Inecrease in trade payables $           9,550.00
Decrease in accrued libility $         (5,260.00)
Cash generated from operations $    80,370.00
Cash flows from investing activities
Purchase of equipment [ 330950-258590] $       (72,360.00)
Purchase of Land $    (153,850.00)
Proceeds from sale of Investment $       101,980.00
Net cash used in investing activities $ (124,230.00)
Cash flows from financing activities
Issue of common stock 59770-47460] $         12,310.00
received Paid up capitalin ecxess of par [224690-131710] $         92,980.00
Proceeds from issuance of long-term debt
Cash Dividend paid $       (43,170.00)
Net cash used in financing activities $    62,120.00
Net increase in cash and cash equivalents $    18,260.00
Cash and cash equivalents at beginning of period $       275,050.00
Cash and cash equivalents at end of period $       293,310.00

ekkarill92 answered 1 year ago
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