Question

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		$277,310		$257,670
Accounts receivable (net)		100,460		92,540
Inventories		283,590		274,000
Investments		0		106,150
Land		145,460		0
Equipment		312,890		242,240
Accumulated depreciation—equipment		(73,250)		(65,320)
	Total assets	$1,046,460		$907,280
Liabilities and Stockholders' Equity
Accounts payable		$189,410		$178,730
Accrued expenses payable		18,840		23,590
Dividends payable		10,460		8,170
Common stock, $10 par		56,510		44,460
Paid-in capital: Excess of issue price over par-common stock		212,430		123,390
Retained earnings		558,810		528,940
	Total liabilities and stockholders’ equity	$1,046,460		$907,280

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 $95,540 cash.
4. The common stock was issued for cash.
5. There was a $72,510 credit to Retained Earnings for net income.
6. There was a $42,640 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		$

Answer 1

$ 72,510 $ $ 7,930 10,610 $ $ $ (7,920) (9,590) 10,680 (4,750 Merrick Equipment Co. Statement of Cash flows For the Year Ended December 31, 2049 Cash flows from Operating Activities: Net Income Adjustments to reconcile Net Income to Net Cash From Operating activities Depreciation expenses Loss on sale of Investments Changes in current Operating assets and liabilities : Increase in Accounts receivables Increases in Inventory Increase in accounts payable Decrease in accured Expensse payable Net Cash provided by operating activities Cash Flows from Investing Activities Sale of Investments Purchase of Land Purchase of equipment Net Cash used by Investing activities Cash Flows from Financing Activities Issuance of Stock Payment of cash dividends Net Cash provided by Financing activities Net Increase in Cash Cash at the beginning of period Cash at the end of period $ $ 6,960 79,470 $ $ $ 95,540 (145,460) (70,650) $ (120,570) $ $ 101,090 (40,350) $ $ $ $ 60,740 19,640 257,670 277,310

Working Notes : Opening Balance of Dividends payable Add: Dividends declared $ $ $ $ $ 8,170 42,640 50,810 10,460 40,350 Less: Closing balance of dividends payable Payment of cash dividends