Statement of cash flows-indirect method The comparative balance sheet of Merrick

Question

Statement of cash flows-indirect method The comparative balance sheet of Merrick Equipment Co. for December 31, 2014 and 2013, is as follows: Additional data obtained from an examination of the accounts in the ledger for 2014 are as follows: Equipment and land were acquired for cash. There were no disposals of equipment during the year. The investments were sold for $191,800 cash. The common stock was issued for cash. There was a $141,680 credit to Retained Earnings for net income There was a $102,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Explanation / Answer

Answer

Cash Flow Statement Cash Flow from Operating Activities ($) Increase in balance of Retained earning ( $393960 - $354280)                39,680 Add: Cash Dividend declared              102,000 Add: Depreciation ($99110 - $84320)                14,790 Add: Loss on Sale Investment ( $102000- $91800)                10,200 Adjustment for Current Assets and current Liabilities Less: Increase in value of Accounts receivable ( $207230 - $188190)              (19,040) Less: Increase in inventory ($298520 - $289850)                (8,670) Add: increase in Accounts payable ($205700 - $194140)                11,560 Add: increase in Accrued expense payable ($30600 - $26860)                   3,740 Net cash generated from Operating Activities              154,260

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