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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 $228,590 $214,360
Accounts receivable (net) 82,810 76,990
Inventories 233,780 227,940
Investments 0 88,310
Land 119,900 0
Equipment 257,920 201,530
Accumulated depreciation—equipment (60,380) (54,340)
Total assets $862,620 $754,790
Liabilities and Stockholders' Equity
Accounts payable $156,130 $148,690
Accrued expenses payable 15,530 19,620
Dividends payable 8,630 6,790
Common stock, $10 par 46,580 36,980
Paid-in capital: Excess of issue price over par-common stock 175,110 102,650
Retained earnings 460,640 440,060
Total liabilities and stockholders’ equity $862,620 $754,790

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 $79,480 cash.
  4. The common stock was issued for cash.
  5. There was a $56,060 credit to Retained Earnings for net income.
  6. There was a $35,480 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 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:
$
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 $
business   accounting   
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Answer #1
Statement of Cash Flows - Indirect Method
Amount in $ Amount in $
Net income $             56,060
Cash flows from operating activities
Adjustments for:
Depreciation $                  6,040
Loss on sales of investment $                  8,830
(Increase) / Decrease in Account receivables $                 -5,820
Inventory Decrease / (Increase) $                 -5,840
Accounts payable Increase / ( Decrese) $                  7,440
Decrease in accrued expenses payable $                 -4,090
Increase in dividend payable $                  1,840
$                8,400
Net cash from operating activities $             64,460
Cash flows from investing activities
Purchase of Equipment $           -1,19,900
Purchase of Land $              -56,390
Sale of investment $                79,480
Net cash used in investing activities $            -96,810
Cash flows from Financing activities
Issue of Common Shares $                82,060
Dividend Paid $              -35,480
Net cash used in financing activities $             46,580
Net increase in cash and cash equivalents $             14,230
Add :Cash and cash equivalents at beginning of period $          2,14,360
Cash and cash equivalents at end of period $          2,28,590
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