Question

1. Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.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		$244,410		$227,360
   Accounts receivable (net)		88,540		81,660
   Inventories		249,940		241,760
   Investments		0		93,660
   Land		128,200		0
   Equipment		275,760		213,750
   Accumulated depreciation—equipment		(64,560)		(57,640)
   	Total assets	$922,290		$800,550
   Liabilities and Stockholders' Equity
   Accounts payable		$166,930		$157,710
   Accrued expenses payable		16,600		20,810
   Dividends payable		9,220		7,200
   Common stock, $10 par		49,800		39,230
   Paid-in capital: Excess of issue price over par-common stock		187,220		108,870
   Retained earnings		492,520		466,730
   	Total liabilities and stockholders’ equity	$922,290		$800,550

   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 $84,290 cash.
   4. The common stock was issued for cash.
   5. There was a $63,420 credit to Retained Earnings for net income.
   6. There was a $37,630 debit to Retained Earnings for cash dividends declared.

   Required:

   Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.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 Cash used for dividends Cash paid for land Cash from sale of investments Cash from sale of common stock Loss on sale of investments Net income	$
   Adjustments to reconcile net income to net cash flow from operating activities:
   Accumulated depreciation Cash paid for land Cash used for dividends Cash from sale of common stock Depreciation Retained earnings
   Cash used for dividends Cash received from the sale of common stock Cash received from net income Gain on sale of investments Loss on sale of investments Retained earnings
   Changes in current operating assets and liabilities:
   Decrease in accounts receivable Decrease in accounts payable Decrease in inventories Depreciation Increase in accounts receivable Loss on sale of investments
   Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Gain on sale of investments Increase in accrued expenses Increase in inventories
   Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in accounts payable Increase in accrued expenses Loss on sale of investments
   Decrease in accounts payable Decrease in accrued expenses payable Decrease in dividends payable Depreciation Increase in accrued expenses payable Increase in land
   Net cash flow from operating activities		$
   Cash flows from (used for) investing activities:
   Cash received from gain on sale of investments Cash received from loss on sale of investments Cash received from net income Cash from sale of common stock Cash from sale of investments Cash received from retained earnings	$
   Cash paid for accounts payable Cash paid for accumulated depreciation Cash paid for common stock Cash paid for depreciation Cash used for dividends Cash used for purchase of land
   Cash paid for accounts receivable Cash paid for accrued expenses Cash paid for accumulated depreciation Cash paid for inventories Cash used for purchase of equipment Cash paid for retained earnings
   Net cash flow used for investing activities
   Cash flows from (used for) financing activities:
   Cash received from net income Cash from sale of common stock Cash received from sale of equipment Cash received from sale of inventories Cash from sale of investments Cash received from retained earnings
   Cash used for dividends Cash paid for inventories Cash used for purchase of equipment Cash paid for purchase of investments Cash used for purchase of land Cash paid for retained earnings
   Net cash flow from financing activities
   Decrease in cash Increase in cash		$
   Cash at the beginning of the year
   Cash at the end of the year		$

Answer 1