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 | $223,540 | $209,380 | |||
Accounts receivable (net) | 80,980 | 75,200 | |||
Inventories | 228,620 | 222,660 | |||
Investments | 0 | 86,260 | |||
Land | 117,250 | 0 | |||
Equipment | 252,220 | 196,850 | |||
Accumulated depreciation—equipment | (59,050) | (53,080) | |||
Total assets | $843,560 | $737,270 | |||
Liabilities and Stockholders' Equity | |||||
Accounts payable | $152,680 | $145,240 | |||
Accrued expenses payable | 15,180 | 19,170 | |||
Dividends payable | 8,440 | 6,640 | |||
Common stock, $10 par | 45,550 | 36,130 | |||
Paid-in capital: Excess of issue price over par-common stock | 171,240 | 100,270 | |||
Retained earnings | 450,470 | 429,820 | |||
Total liabilities and stockholders’ equity | $843,560 | $737,270 |
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
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 | $ |
*Solution:-
Merrick Equipment Co. | |||
Statement of Cash Flows | |||
For the Year Ended December 31, 20Y9 | |||
Cash flows form operating activities: | |||
Net Income | 55,300 | ||
Adjustments to reconcile net income to net cash flow from operating activities: | |||
Depreciation | 5,970 | ||
Loss on sale of investments | 8,630 | ||
Changes in current operating assets and liabilities: | |||
Increase in accounts receivable | (5,780) | ||
Increase in Inventories | (5,960) | ||
Increase in Accounts Payable | 7,440 | ||
Decreasein Accured Interest | (3,990) | ||
Net cash flow from operating activities | 61,610 | ||
Cash flows from (used for) investing activities: | |||
Cash received from sale of investments | 77,630 | ||
Less: Cash paid for purchase of land | 117,250 | ||
Cash paid for purchase of equipment | 55,370 | 172,620 | |
Net cash flow used for investing activities | (94,990) | ||
Cash flows from (used for) financing activities: | |||
Cash received from sale of common stock | 80,390 | ||
Less: Cash paid for dividends | (32,850) | ||
Net cash flow from financing activities | 47,540 | ||
Increase in cash | 14,160 | ||
Cash at the beginning of the year | 209,380 | ||
Cash at the end of the year | 223,540 |
Please Rate or comment if you have any doubt regarding this solution.
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 $270,460 $249,560 Accounts receivable (net) 97,980 89,630 Inventories 276,580 265,390 Investments 0 102,810 Land 141,860 0 Equipment 305,160 234,620 Accumulated depreciation—equipment (71,440) (63,270) Total assets $1,020,600 $878,740 Liabilities and Stockholders' Equity Accounts payable $184,730 $173,110 Accrued expenses payable 18,370 22,850 Dividends payable 10,210 7,910 Common stock, $10 par 55,110 43,060...
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