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		$311,440	$290,050
Accounts receivable (net)		112,820	104,170
Inventories		318,500	308,430
Investments		0	119,490
Land		163,360	0
Equipment		351,400	272,680
Accumulated depreciation—equipment		(82,270)	(73,530)
	Total assets	$1,175,250	$1,021,290

Liabilities and Stockholders' Equity
Accounts payable		$212,720	$201,190
Accrued expenses payable		21,150	26,550
Dividends payable		11,750	9,190
Common stock, $10 par		63,460	50,040
Paid-in capital: Excess of issue price over par-common stock		238,580	138,900
Retained earnings		627,590	595,420
	Total liabilities and stockholders’ equity	$1,175,250	$1,021,290

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 $107,540 cash.
The common stock was issued for cash.
There was a $80,170 credit to Retained Earnings for net income.
There was a $48,000 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

Cash Flow Statement (Indirect Method)
For the Year ended
Particulars	Amount $
Cash Flow from Operating Activities
Net Income	80,170

Adjustments
Add: Depreciation & Amortisation	8,740
Add: Loss on sale of investment	11,950

Increase in Accounts Receivable	-8,650
Increase in Inventory	-10,070
Increase in Accounts Payable	11,530
Decrease in Accrued expenses payable	-5,400

Total Cash Flow from Operating Activities	88,270

Cash flows from investing activities
Purchase of property, plant, and equipment	-78720
Purchase of Land	-163360
Sale of Investment	107540

Net cash used in investing activities	-1,34,540

Cash flows from financing activities
Proceeds from issuance of Shares	113100
Dividend Paid	-45440

Net cash used in financing activities	67,660

Net increase in cash and cash equivalents	21,390
Cash and cash equivalents at beginning of period	2,90,050
Cash and cash equivalents at end of period	$3,11,440

ekkarill92 answered 1 year ago

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