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 $283,380 $266,640 Accounts receivable (net) 102,660 95,770 Inventories 289,780 283,550 Investments 0 109,850 Land 148,640 0 Equipment 319,740 250,680 Accumulated depreciation—equipment (74,850) (67,600) Total assets $1,069,350 $938,890 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $193,550 $184,960 Accrued expenses payable (operating expenses) 19,250 24,410 Dividends payable 10,690 8,450 Common stock, $10 par 57,740 46,010 Paid-in capital in excess of par—common stock 217,080 127,690 Retained earnings 571,040 547,370 Total liabilities and stockholders’ equity $1,069,350 $938,890 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 $128,520 cash. The common stock was issued for cash. There was a $67,800 credit to Retained Earnings for net income. There was a $44,130 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 (used for) operating activities: Net income 67,800 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 7,250 Gain on sale of investments fill in the blank 6 Changes in current operating assets and liabilities: Increase in accounts receivable -6,890 Increase in inventories -6,230 Increase in accounts payable 8,590 Decrease in accrued expenses payable fill in the blank 14 Net cash flow from operating activities $fill in the blank 15 Cash flows from (used for) investing activities: Cash received from sale of investments 128,520 Cash paid for purchase of land -148,640 Cash paid for purchase of equipment -69,060 Net cash flow used for investing activities -89,180 Cash flows from (used for) financing activities: Cash received from sale of common stock $fill in the blank 24 Cash paid for dividends fill in the blank 26 Net cash flow from financing activities fill in the blank 27 Net increase in cash 16,740 Cash balance, January 1, 20Y9 266,640 Cash balance, December 31, 20Y9 283380

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 $283,380 $266,640 Accounts receivable (net) 102,660 95,770 Inventories 289,780 283,550 Investments 0 109,850 Land 148,640 0 Equipment 319,740 250,680 Accumulated depreciation—equipment (74,850) (67,600) Total assets $1,069,350 $938,890 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $193,550 $184,960 Accrued expenses payable (operating expenses) 19,250 24,410 Dividends payable 10,690 8,450 Common stock, $10 par 57,740 46,010 Paid-in capital in excess of par—common stock 217,080 127,690 Retained earnings 571,040 547,370 Total liabilities and stockholders’ equity $1,069,350 $938,890 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 $128,520 cash. The common stock was issued for cash. There was a $67,800 credit to Retained Earnings for net income. There was a $44,130 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 (used for) operating activities: Net income 67,800 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 7,250 Gain on sale of investments fill in the blank 6 Changes in current operating assets and liabilities: Increase in accounts receivable -6,890 Increase in inventories -6,230 Increase in accounts payable 8,590 Decrease in accrued expenses payable fill in the blank 14 Net cash flow from operating activities $fill in the blank 15 Cash flows from (used for) investing activities: Cash received from sale of investments 128,520 Cash paid for purchase of land -148,640 Cash paid for purchase of equipment -69,060 Net cash flow used for investing activities -89,180 Cash flows from (used for) financing activities: Cash received from sale of common stock $fill in the blank 24 Cash paid for dividends fill in the blank 26 Net cash flow from financing activities fill in the blank 27 Net increase in cash 16,740 Cash balance, January 1, 20Y9 266,640 Cash balance, December 31, 20Y9 283380

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—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	$283,380		$266,640
Accounts receivable (net)	102,660		95,770
Inventories	289,780		283,550
Investments	0		109,850
Land	148,640		0
Equipment	319,740		250,680
Accumulated depreciation—equipment	(74,850)		(67,600)
Total assets	$1,069,350		$938,890

Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)	$193,550		$184,960
Accrued expenses payable (operating expenses)	19,250		24,410
Dividends payable	10,690		8,450
Common stock, $10 par	57,740		46,010
Paid-in capital in excess of par—common stock	217,080		127,690
Retained earnings	571,040		547,370
Total liabilities and stockholders’ equity	$1,069,350		$938,890

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 $128,520 cash.
The common stock was issued for cash.
There was a $67,800 credit to Retained Earnings for net income.
There was a $44,130 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 (used for) operating activities:
Net income	67,800
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	7,250
Gain on sale of investments	fill in the blank 6
Changes in current operating assets and liabilities:
Increase in accounts receivable	-6,890
Increase in inventories	-6,230
Increase in accounts payable	8,590
Decrease in accrued expenses payable	fill in the blank 14
Net cash flow from operating activities		$fill in the blank 15
Cash flows from (used for) investing activities:
Cash received from sale of investments	128,520
Cash paid for purchase of land	-148,640
Cash paid for purchase of equipment	-69,060
Net cash flow used for investing activities		-89,180
Cash flows from (used for) financing activities:
Cash received from sale of common stock	$fill in the blank 24
Cash paid for dividends	fill in the blank 26
Net cash flow from financing activities		fill in the blank 27
Net increase in cash		16,740
Cash balance, January 1, 20Y9		266,640
Cash balance, December 31, 20Y9		283380

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