Question

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		$231,740		$216,560
Accounts receivable (net)		83,950		77,780
Inventories		236,980		230,290
Investments		0		89,220
Land		121,550		0
Equipment		261,470		203,600
Accumulated depreciation—equipment		(61,210)		(54,900)
	Total assets	$874,480		$762,550
Liabilities and Stockholders' Equity
Accounts payable		$158,280		$150,220
Accrued expenses payable		15,740		19,830
Dividends payable		8,740		6,860
Common stock, $10 par		47,220		37,360
Paid-in capital: Excess of issue price over par-common stock		177,520		103,710
Retained earnings		466,980		444,570
	Total liabilities and stockholders’ equity	$874,480		$762,550

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 $80,300 cash.
4. The common stock was issued for cash.
5. There was a $58,250 credit to Retained Earnings for net income.
6. There was a $35,840 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:
Net income	$	58,250
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation		6310
Loss on sale of investments		8920
Changes in current operating assets and liabilities:		-6170
Increase in accounts receivable
Increase in inventories
Increase in accounts payable
Decrease in accrued expenses payable
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
Cash from sale of investments	$
?
?
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		$

Can you please provide the way to find the information? In parenthesis or some way that I can identify the method of calculating them?

Answer 1

Solution

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net income	$        58,250.00
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	$          6,310.00
Loss on sale of investments	$          8,920.00
Changes in current operating assets and liabilities:
Increase in accounts receivable	$         (6,170.00)
Increase in inventories	$         (6,690.00)
Increase in accounts payable	$          8,060.00
Decrease in accrued expenses payable	$         (4,090.00)
Net cash flow from operating activities		$    64,590.00
Cash flows from (used for) investing activities:
Cash Received from sale of investments	$        80,300.00
Cash used for purchase of land	$     (121,550.00)
Cash used for purchase of equipment	$       (57,870.00)
Net cash flow used for investing activities		$   (99,120.00)
Cash flows from (used for) financing activities:
Cash received from sale of common stock	$        83,670.00
Cash used for dividends	$       (33,960.00)
Net cash flow from financing activities		$    49,710.00
Increase in cash		$    15,180.00
Cash at the beginning of the year		$ 216,560.00
Cash at the end of the year		$ 231,740.00

.

.

Dividends paid in cash
Dividends declared	$    35,840.00
Less: Increase in dividends payable	$    (1,880.00)
Dividends paid in cash	$    33,960.00