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, 20Y9 and 20Y8, is as follows:

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 $84,220 cash.

The common stock was issued for cash.

There was a $66,200 credit to Retained Earnings for net income.

There was a $37,590 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.

Dec. 31, 20Y9 Dec. 31, 20Y8 Assets Cash $245,600 $227,150 Accounts receivable (net) 88,970 81,580 Inventories 251,170 241,550 Investments 0 93,580 Land 128,820 0 Equipment 277,110 213,550 Accumulated depreciation—equipment (64,880) (57,590) Total assets $926,790 $799,820 Liabilities and Stockholders' Equity Accounts payable $167,750 $157,560 Accrued expenses payable 16,680 20,800 Dividends payable 9,270 7,200 Common stock, $10 par 50,050 39,190 Paid-in capital: Excess of issue price over par-common stock 188,140 108,780 Retained earnings 494,900 466,290 Total liabilities and stockholders’ equity $926,790 $799,820 w.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator-; a 87)-ketravion GET-Login- User Dashboard D User Login Study. Lowering The Netflix Show Me How Statement of Cash Flows-Indirect Method sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows: Dec. 31, 20Y9 Dec. 31, 20Y8 Assets Cash $245,600 $227,150 88,970 81.580 251,170241,550 093,580 Accounts receivable (net) 128,820 277,110 213.550 (64,880) (57,590) Total assets $926,790 $799.820 Liabilities and Stockholders' Equity Accounts payable Aecrued expenses payable Dividends payable Common stock, $10 par Paid-in captal: Excess of issue price over par-common stock 167.750 $157.560 16.680 20.800 7.200 50.030 39.190 188.140108.780 9,270 Chack My Work Alt work saved

Explanation / Answer

Merrick Equipment Co. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income 66200 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 7290 Loss on sale of investments 9360 Changes in current operating assets and liabilities: Increase in accounts receivable -7390 Increase in inventories -9620 Increase in accounts payable 10190 Decrease in accrued expenses payable -4120 5710 Net cash flow from operating activities 71910 Cash flows from (used for) investing activities: Cash from sale of investments 84220 Cash used for purchase of land -128820 Cash used for purchase of equipment -63560 Net cash flow used for investing activities -108160 Cash flows from (used for) financing activities: Cash from sale of common stock 90220 Cash used for dividends -35520 Net cash flow from financing activities 54700 Increase in cash 18450 Cash at the beginning of the year 227150 Cash at the end of the year 245600

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