PR 131B Statement of cash flowsindirect method The comparati

PR 13-1B Statement of cash flows-indirect method The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and Obj. 2, 3, 4, 5 20Y8, ash flow from acivitien is as follows 5154,260 Is as Dec. 31,20Y9 Dec. 31, 20Y8 Assets Cash Accounts Inventories Investments . Land . ...$ 70,720 $ 47,940 188,190 289,850 receivable (net).. BITCEL TEMPLATE 207,230 298,520 . .. 102000 358,020 295800 295,800 438,600 Accumulated depreciation-equipment Total assets . . . . $1,211,760 Liabilities and Stockholders\'Equity Accounts payable (merchandise creditors) . . . . .. . . . . . . . . . . . . . . . Accrued expenses payable (operating expenses) . . . . . . . . . … $ $194,140 205,700 30,600 25,500 202,000 354,000 102,000 204,000 354,280 $901,680 Paid-in capital: Excess of issue price over par-common stock.... Retained earnings Total liabilities and stockholders\'equity... 51211.760 Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows: A. Equipment and land were acquired for cash. B. There were no disposals of equipment during the year. C. The investments were sold for $91,800 cash. D. The common stock was issued for cash. E. There was a $141,680 credit to Retained Earnings for net income. F. There was a $102,000 debit to Retained Earnings for cash dividends declared Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Solution

Merrick equipment Co

Statement of cash flows for the year ended December 31, 2019

Cost of investments $102000

sale of investments ($91800)

Loss on sale $10200.

Particulars	Amount($)	Amount($)
Cash flows from operating activities:
Net income	141680
Depreciation	14790
Loss on sale of investments	10200
Less: increase accounts receivable	(19040)
increase inventories	(8670)
Add: increase accounts payable	11560
increase accrued expenses payable	3740
increase dividends payable	5100
Net cash flows provided by operating activities		$159360
Cash flows from investing activities:
Sale of investments	91800
Purchase of land	(295800)
Purchase of equipment	(80580)
Net cash flows used by investing activities		(125220)
Cash flows from financing activities:
Issue of common stock	100000
Issue of paid in capital	150000
Dividend paid	(102000)
Net cash flows provided by financing activities		22780
Add: beginning cash balance		47940
Ending cash balance		70720