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 $224,660 $207,540 Accounts receivable (net) 81,390 74,540 Inventories 229,760 220,710 Investments 0 85,500 Land 117,840 0 Equipment 253,490 195,120 Accumulated depreciation—equipment (59,350) (52,620) Total assets $847,790 $730,790 Liabilities and Stockholders' Equity Accounts payable $153,450 $143,970 Accrued expenses payable 15,260 19,000 Dividends payable 8,480 6,580 Common stock, $10 par 45,780 35,810 Paid-in capital: Excess of issue price over par-common stock 172,100 99,390 Retained earnings 452,720 426,040 Total liabilities and stockholders’ equity $847,790 $730,790 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 $76,950 cash. The common stock was issued for cash. There was a $61,030 credit to Retained Earnings for net income. There was a $34,350 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: $fill in the blank 2 Adjustments to reconcile net income to net cash flow from operating activities: fill in the blank 4 fill in the blank 6 Changes in current operating assets and liabilities: fill in the blank 8 fill in the blank 10 fill in the blank 12 fill in the blank 14 Net cash flow from operating activities $fill in the blank 15 Cash flows from (used for) investing activities: $fill in the blank 17 fill in the blank 19 fill in the blank 21 Net cash flow used for investing activities fill in the blank 22 Cash flows from (used for) financing activities: fill in the blank 24 fill in the blank 26 Net cash flow from financing activities fill in the blank 27 $fill in the blank 29 Cash at the beginning of the year fill in the blank 30 Cash at the end of the year $
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The comparative
| Dec. 31, 20Y9 | Dec. 31, 20Y8 | ||||
| Assets | |||||
| Cash | $224,660 | $207,540 | |||
| 81,390 | 74,540 | ||||
| Inventories | 229,760 | 220,710 | |||
| Investments | 0 | 85,500 | |||
| Land | 117,840 | 0 | |||
| Equipment | 253,490 | 195,120 | |||
| (59,350) | (52,620) | ||||
| Total assets | $847,790 | $730,790 | |||
| Liabilities and |
|||||
| Accounts payable | $153,450 | $143,970 | |||
| Accrued expenses payable | 15,260 | 19,000 | |||
| Dividends payable | 8,480 | 6,580 | |||
| Common stock, $10 par | 45,780 | 35,810 | |||
| Paid-in capital: Excess of issue price over par-common stock | 172,100 | 99,390 | |||
| 452,720 | 426,040 | ||||
| Total liabilities and stockholders’ equity | $847,790 | $730,790 |
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 $76,950 cash.
- The common stock was issued for cash.
- There was a $61,030 credit to Retained Earnings for net income.
- There was a $34,350 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of
| Merrick Equipment Co. | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 20Y9 | ||
| Cash flows from operating activities: | ||
| $fill in the blank 2 | ||
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| fill in the blank 4 | ||
| fill in the blank 6 | ||
| Changes in current operating assets and liabilities: | ||
| fill in the blank 8 | ||
| fill in the blank 10 | ||
| fill in the blank 12 | ||
| fill in the blank 14 | ||
| Net cash flow from operating activities | $fill in the blank 15 | |
| Cash flows from (used for) investing activities: | ||
| $fill in the blank 17 | ||
| fill in the blank 19 | ||
| fill in the blank 21 | ||
| Net cash flow used for investing activities | fill in the blank 22 | |
| Cash flows from (used for) financing activities: | ||
| fill in the blank 24 | ||
| fill in the blank 26 | ||
| Net cash flow from financing activities | fill in the blank 27 | |
| $fill in the blank 29 | ||
| Cash at the beginning of the year | fill in the blank 30 | |
| Cash at the end of the year | $ |
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