Statement of Cash FlowsIndirect Method The comparative balan

Statement of Cash Flows—Indirect Method

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

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 $83,700 cash.

The common stock was issued for cash.

There was a $57,390 credit to Retained Earnings for net income.

	Dec. 31, 20Y9	Dec. 31, 20Y8
Assets
Cash	$239,910		$225,750
Accounts receivable (net)	86,910		81,080
Inventories	245,350		240,050
Investments	0		93,000
Land	125,840		0
Equipment	270,690		212,230
Accumulated depreciation—equipment	(63,370)		(57,230)
	Total assets	$905,330		$794,880
Liabilities and Stockholders\' Equity
Accounts payable	$163,860		$156,590
Accrued expenses payable	16,300		20,670
Dividends payable	9,050		7,150
Common stock, $10 par	48,890		38,950
Paid-in capital: Excess of issue price over par-common stock	183,780		108,100
Retained earnings	483,450		463,420
	Total liabilities and stockholders’ equity	$905,330		$794,880

Required: Prepare a statement of cash fows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, 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: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilitles: Net cash flow from operating activities Cash flows from (used for) investing activities: Net cash flow used for investing activities Cash flows from (used for) financing activities: Net cash flow from financing activities Cash at the beginning of the year Cash at the end of the year

Solution

Merrick Equipment Co Statement of Cash Flows   For the Year Ended December 31, 20Y9 Cash flows from operating activities Net Income   $      57,390 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense $        6,140 63370-57230 Loss on sale of investment $        9,300 93000-83700 Changes in current operating assets and liabilities Increase in accounts receivable $      (5,830) 81080-86910 Increase in inventory $      (5,300) 240050-245350 Increase in accounts payable $        7,270 163860-156590 Decrease in accrued expense payable $      (4,370) 16300-20670 $        7,210 Net cash provided by operating activities $      64,600 Cash flows from investing activities Cash from sale of investments $      83,700 Cash paid for purchase of equipment $   (58,460) 212230-270690 Cash paid for purchase of land $ (125,840) Net cash used by investing activities $ (100,600) Cash flows from financing activities Cash paid for dividends $   (35,460) 9050-37360-7150 Cash from issuance of common stock $      85,620 48890-38950+183780-108100 Net cash provided by financing activities $      50,160 Net Increase in cash and cash equivalents $      14,160 Cash and cash equivalents at beginning of period $   225,750 Cash and cash equivalents at end of period $   239,910