Question

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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		$279,110		$261,730
Accounts receivable (net)		101,110		94,000
Inventories		285,420		278,320
Investments		0		107,820
Land		146,400		0
Equipment		314,920		246,060
Accumulated depreciation—equipment		(73,730)		(66,350)
	Total assets	$1,053,230		$921,580
Liabilities and Stockholders' Equity
Accounts payable		$190,630		$181,550
Accrued expenses payable		18,960		23,960
Dividends payable		10,530		8,290
Common stock, $10 par		56,870		45,160
Paid-in capital: Excess of issue price over par-common stock		213,810		125,330
Retained earnings		562,430		537,290
	Total liabilities and stockholders’ equity	$1,053,230		$921,580

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 $97,040 cash.

The common stock was issued for cash.

There was a $68,450 credit to Retained Earnings for net income.

There was a $43,310 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		$

Answer 1

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net income		68,450
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation Expense	7,380
Loss on sale of Investments	10,780
Changes in current operating assets and liabilities:
Increase in Accounts Receivable (net)	(7,110)
Increase in Inventories	(7,100)
Increase in Accounts Payable	9,080
Decrease in Accrued Expense Payable	(5,000)	8,030
Net cash flow from operating activities		76,480
Cash flows from (used for) investing activities:
Cash prcoeeds from Investment sold	97,040
Purchase of land	(146,400)
Purchase of Equipment	(68,860)
Net cash flow used for investing activities		(118,220)
Cash flows from (used for) financing activities:
Cash proceeds from issue of common stock	100,190
Cash Dividend paid	(41,070)
Net cash flow from financing activities		59,120
		17,380
Cash at the beginning of the year		261,730
Cash at the end of the year		279,110