—indirect methodThe comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:Line Item DescriptionDecember 31, 20Y9December 31, 20Y8Assets Cash$70,720$47,940Accounts receivable (net)207,230188,190Inventories298,520289,850Investments0102,000Land295,8000Equipment438,600358,020Accumulated depreciation—equipment(99,110)(84,320)Total assets$1,211,760$901,680Liabilities and Stockholders' Equity Accounts payable (merchandise creditors)$205,700$194,140Accrued expenses payable (operating expenses)30,60026,860Dividends payable25,50020,400Common stock, $1 par202,000102,000Paid-in capital in excess of par—common stock354,000204,000Retained earnings393,960354,280Total liabilities and stockholders' equity$1,211,760$901,680Additional 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 $141,680 credit to Retained Earnings for net income.There was a $102,000 debit to Retained Earnings for cash dividends declared.Required:Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) 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, 20Y9Line Item DescriptionAmountAmountCash flows from (used for) operating activities: $- Select - Adjustments to reconcile net income to net cash flows from (used for) operating activities: - Select - - Select - Changes in current operating assets and liabilities: - Select - - Select - - Select - - Select - $- Select -Cash flows from (used for) investing activities: $- Select - - Select -blank - Select - - Select -Cash flows from (used for) financing activities: $- Select - - Select - - Select - $- Select -Cash balance, January 1, 20Y9 Cash balance, January 1, 20Y9Cash balance, December 31, 20Y9 $Cash balance, December 31, 20Y9

Indirect method : Under the indirect method, the cash flow statement begins with net income on an…

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

—indirect method

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

Line Item Description	December 31, 20Y9	December 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 (merchandise creditors)	$205,700	$194,140
Accrued expenses payable (operating expenses)	30,600	26,860
Dividends payable	25,500	20,400
Common stock, $1 par	202,000	102,000
Paid-in capital in excess of par—common stock	354,000	204,000
Retained earnings	393,960	354,280
Total liabilities and stockholders' equity	$1,211,760	$901,680

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 $141,680 credit to Retained Earnings for net income.
There was a $102,000 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) 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, 20Y9

Line Item Description	Amount	Amount
Cash flows from (used for) operating activities:
	$- Select -
Adjustments to reconcile net income to net cash flows from (used for) operating activities:
	- Select -
	- Select -
Changes in current operating assets and liabilities:
	- Select -
	- Select -
	- Select -
	- Select -
		$- Select -
Cash flows from (used for) investing activities:
	$- Select -
	- Select -	blank
	- Select -
		- Select -
Cash flows from (used for) financing activities:
	$- Select -
	- Select -
		- Select -
		$- Select -
Cash balance, January 1, 20Y9		Cash balance, January 1, 20Y9
Cash balance, December 31, 20Y9		$Cash balance, December 31, 20Y9

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