Homework SourseThe comparative balance sheet of Merrick Equipment Co for De
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 $92,000 cash.
The common stock was issued for cash.
There was a $69,200 credit to Retained Earnings for net income.
There was a $41,060 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 out flows, cash payments, decreases in cash, or any negative adjustments.
| Dec. 31, 20Y9 | Dec. 31, 20Y8 | ||||
| Assets | |||||
| Cash | $266,740 | $248,130 | |||
| Accounts receivable (net) | 96,630 | 89,120 | |||
| Inventories | 272,790 | 263,860 | |||
| Investments | 0 | 102,220 | |||
| Land | 139,910 | 0 | |||
| Equipment | 300,960 | 233,280 | |||
| Accumulated depreciation—equipment | (70,460) | (62,910) | |||
| Total assets | $1,006,570 | $873,700 | |||
| Liabilities and Stockholders\' Equity | |||||
| Accounts payable | $182,190 | $172,120 | |||
| Accrued expenses payable | 18,120 | 22,720 | |||
| Dividends payable | 10,070 | 7,860 | |||
| Common stock, $10 par | 54,350 | 42,810 | |||
| Paid-in capital: Excess of issue price over par-common stock | 204,330 | 118,820 | |||
| Retained earnings | 537,510 | 509,370 | |||
| Total liabilities and stockholders’ equity | $1,006,570 | $873,700 |
Solution
Statement of cash flow :
| Cash flow from operating activities | ||
| Net income | 69200 | |
| Adjustment to reconcile net income to net cash flow from operating activities | ||
| Depreciation expense | 7550 | |
| Loss on sale of investment | 10220 | |
| Change in current assets and current liabilities | ||
| Increase account receivable | -7510 | |
| Increase inventory | -8930 | |
| Increase account payable | 10070 | |
| Decrease accured expense payable | -4600 | |
| Net cash flow from operating activities | 76000 | |
| Cash flow from investing activities | ||
| Sale of investment | 92000 | |
| Purchase of Land | -139910 | |
| Purchase of equipment | -67680 | |
| Net cash flow from investing activities | -115590 | |
| Cash flow from financing activities | ||
| Dividend paid | -38850 | |
| Issue common stock | 97050 | |
| Net cash flow from financing activities | 58200 | |
| Net cash flow | 18610 | |
| Cash at the beginning of the year | 248130 | |
| Cash at the end of the year | 266740 | |
