Statement of Cash Flows—Direct Method Applied to PR 16-1BThe comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is as follows: Dec. 31, 20Y9 Dec. 31, 20Y8Assets Cash$70,720 $47,940 Accounts receivable (net)207,230 188,190 Inventories298,520 289,850 Investments0 102,000 Land295,800 0 Equipment438,600 358,020 Accumulated depreciation—equipment(99,110) (84,320) Total assets$1,211,760 $901,680 Liabilities and Stockholders' EquityAccounts payable$205,700 $194,140 Accrued expenses payable30,600 26,860 Dividends payable25,500 20,400 Common stock, $1 par202,000 102,000 Paid-in capital: Excess of issue price over par—common stock354,000 204,000 Retained earnings393,960 354,280 Total liabilities and stockholders' equity$1,211,760 $901,680 The income statement for the year ended December 31, 20Y9, is as follows:Sales $2,023,898Cost of merchandise sold 1,245,476Gross profit $778,422Operating expenses: Depreciation expense$14,790 Other operating expenses517,299 Total operating expenses 532,089Operating income $246,333Other expenses: Loss on sale of investments (10,200)Income before income tax $236,133Income tax expense 94,453Net income $141,680Additional 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 $91,800 cash.The common stock was issued for cash.There was a $102,000 debit to Retained Earnings for cash dividends declared.Required:Prepare a statement of cash flows, using the direct 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 FlowsFor the Year Ended December 31, 20Y9Cash flows from operating activities: Cash received from customers $fill in the blank 2 Cash payments for merchandise fill in the blank 4 Cash payments for operating expenses fill in the blank 6 Cash payments for taxes fill in the blank 8 Net cash flow from operating activities $fill in the blank 9Cash flows from (used for) investing activities: Cash from sale of investments $fill in the blank 11 Cash used for purchase of land fill in the blank 13 Cash used for purchase of equipment fill in the blank 15 Net cash flow used for investing activities fill in the blank 16Cash flows from (used for) financing activities: Cash from sale of common stock $fill in the blank 18 Cash used for dividends fill in the blank 20 Net cash flow from financing activities fill in the blank 21Increase in cash $fill in the blank 23Cash at the beginning of the year fill in the blank 24Cash at the end of the year $fill in the blank 25

Cash Flow Statement: It is a financial statement prepared by a company to report their cash…

Answered: Prepare a statement of cash flows,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statement of Cash Flows—Direct Method Applied to PR 16-1B

The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is as follows:

	Dec. 31, 20Y9	Dec. 31, 20Y8
Assets
Cash	$70,720		$47,940
Accounts receivable (net)	207,230		188,190
Inventories	298,520		289,850
Investments	0		102,000
Land	295,800		0
Equipment	438,600		358,020
Accumulated depreciation—equipment	(99,110)		(84,320)
Total assets	$1,211,760		$901,680
Liabilities and Stockholders' Equity
Accounts payable	$205,700		$194,140
Accrued expenses payable	30,600		26,860
Dividends payable	25,500		20,400
Common stock, $1 par	202,000		102,000
Paid-in capital: Excess of issue price over par—common stock	354,000		204,000
Retained earnings	393,960		354,280
Total liabilities and stockholders' equity	$1,211,760		$901,680

The income statement for the year ended December 31, 20Y9, is as follows:

Sales		$2,023,898
Cost of merchandise sold		1,245,476
Gross profit		$778,422
Operating expenses:
Depreciation expense	$14,790
Other operating expenses	517,299
Total operating expenses		532,089
Operating income		$246,333
Other expenses:
Loss on sale of investments		(10,200)
Income before income tax		$236,133
Income tax expense		94,453
Net income		$141,680

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 $91,800 cash.
The common stock was issued for cash.
There was a $102,000 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct 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:
Cash received from customers	$fill in the blank 2
Cash payments for merchandise	fill in the blank 4
Cash payments for operating expenses	fill in the blank 6
Cash payments for taxes	fill in the blank 8
Net cash flow from operating activities		$fill in the blank 9
Cash flows from (used for) investing activities:
Cash from sale of investments	$fill in the blank 11
Cash used for purchase of land	fill in the blank 13
Cash used for purchase of equipment	fill in the blank 15
Net cash flow used for investing activities		fill in the blank 16
Cash flows from (used for) financing activities:
Cash from sale of common stock	$fill in the blank 18
Cash used for dividends	fill in the blank 20
Net cash flow from financing activities		fill in the blank 21
Increase in cash		$fill in the blank 23
Cash at the beginning of the year		fill in the blank 24
Cash at the end of the year		$fill in the blank 25

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