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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 $244,570 $229,080
Accounts receivable (net) 88,600 82,280
Inventories 250,110 243,600
Investments 0 94,370
Land 128,280 0
Equipment 275,950 215,370
Accumulated depreciation—equipment (64,600) (58,080)
Total assets $922,910 $806,620
Liabilities and Stockholders' Equity
Accounts payable $167,050 $158,900
Accrued expenses payable 16,610 20,970
Dividends payable 9,230 7,260
Common stock, $10 par 49,840 39,520
Paid-in capital: Excess of issue price over par-common stock 187,350 109,700
Retained earnings 492,830 470,270
Total liabilities and stockholders’ equity $922,910 $806,620

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 $84,930 cash.

The common stock was issued for cash.

There was a $60,470 credit to Retained Earnings for net income.

There was a $37,910 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

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net Income 60470
Adjustments to reconcile net income to net cash flow from operating activities:
Loss on sale of investment [94370cost -84930sale value] 9440
Depreciation [64600-58080] 6520
Changes in current operating assets and liabilities:
Increase in accounts receivable [88600-82280] (6320)
Increase in inventories [250110-243600] (6510)
Increase in accounts payable [167050-158900] 8150
Decrease in Accrued expenses payable [20970-16610] (4360) 6920
Net cash flow from operating activities 67390
Cash flows from (used for) investing activities:
sale of investment 84930
purchase of land (128280)
Purchase of equipment [275950-215370] (60580)
Net cash flow used for investing activities (103930)
Cash flows from (used for) financing activities:
Issue of common stock ,par [49840-39520] 10320
Paid-in capital: Excess of issue price over par-common stock [187350-109700] 77650
Dividendpaid [7260+37910-9230] (35940)
Net cash flow from financing activities 52030
Increase/(decrease)in cash during the year 15490
Beginning cash balance 229080
Cash at the end of the year 244570

ekkarill92 answered 1 year ago
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