Question

Ch 16-3 Exercises and Problems eBook Show Me How Calculator Print Item Statement of Cash Flows-Indirect Method The comparative balance sheet of Merrick Equipment Co. for December 31, 2019 and 2088, is as follows: Dec 31, 2049 Dec. 31, 2018 Assets Cash $237,780 Accounts receivable (net) Inventories 86,140 243,170 $224,000 80,450 238,190 92,280 Investments Land Equipment Accumulated depreciation-equipment 124,720 268,290 (62,810) $897,290 210,590 (56,790) $788,720 Total assets Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Dividends payable $162,410 16,150 8,970 48,450 $155,380 20,510 7,100 38,650 Common stock, $10 par D ata Center 1R71 חלל לחי

Answer 1

Solution:

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net Income	$          56,420
Adjustments to reconcile to operating cash flow
Depreciation expense	$            6,020
Loss on sale of investments	$            9,230
Changes in current operating assets and liabilities:
Increase in Account Receivable	$          (5,690)
Increase in Inventory	$          (4,980)
Increase in accounts payable	$            7,030
Decrease in accrued expenses payable	$          (4,360)
Net cash flows from operating activities		$            63,670
Cash flow from[used for] investing activities:
Cash from sale of Investments	$          83,050
Cash used for purchase of land	$     (124,720)
Cash used for purchase of equipment	$        (57,700)
Net cash flow from investing activities (B)		$         (99,370)
Cash flow from financing activities:
Cash from sale of common stock	$          84,680
Cash used for dividends	$        (35,200)
Net Cash flow from financing activities (C )		$            49,480
Increase in cash[A+B+C]		$            13,780
Cash at the beginning of the year		$         224,000
Cash at the end of the year		$         237,780

Working:

Retained Earnings
		Beg. Balance	$ 459,810
Dividends	$ 37,070	Net Income	$    56,420
		End Balance	$ 479,160
Dividends Payable
		Beg. Balance	$      7,100
Cash paid for dividend	$ 35,200	Dividend Payable	$    37,070
		End Balance	$      8,970