The comparative balance sheet of Merrick Equipment Co. for December 31, 2016 and
ID: 2403914 • Letter: T
Question
The comparative balance sheet of Merrick Equipment Co. for December 31, 2016 and 2015, is as follows:
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$70,720.00
$47,940.00
4
Accounts receivable (net)
207,230.00
188,190.00
5
Inventories
298,520.00
289,850.00
6
Investments
0.00
102,000.00
7
Land
295,800.00
0.00
8
Equipment
438,600.00
358,020.00
9
Accumulated depreciation-equipment
(99,110.00)
(84,320.00)
10
Total assets
$1,211,760.00
$901,680.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$205,700.00
$194,140.00
13
Accrued expenses payable (operating expenses)
30,600.00
26,860.00
14
Dividends payable
25,500.00
20,400.00
15
Common stock, $1 par
202,000.00
102,000.00
16
Paid-in capital: Excess of issue price over par—common stock
354,000.00
204,000.00
17
Retained earnings
393,960.00
354,280.00
18
Total liabilities and stockholders’ equity
$1,211,760.00
$901,680.00
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.
Labels and Amount Descriptions
Net income
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities
The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.
. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.
Question not attempted.
Score: 161/178
Merrick Equipment Co.
Statement of Cash Flows
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1
Cash flows from operating activities:
2
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3
Adjustments to reconcile net income to net cash flow from operating activities:
4
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5
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6
Changes in current operating assets and liabilities:
7
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8
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9
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10
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11
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12
13
Cash flows from investing activities:
14
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15
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16
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17
18
19
Cash flows from financing activities:
20
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21
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22
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23
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24
Cash at the beginning of the year
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25
Cash at the end of the year
1
Dec. 31, 2016
Dec. 31, 2015
2
Assets
3
Cash
$70,720.00
$47,940.00
4
Accounts receivable (net)
207,230.00
188,190.00
5
Inventories
298,520.00
289,850.00
6
Investments
0.00
102,000.00
7
Land
295,800.00
0.00
8
Equipment
438,600.00
358,020.00
9
Accumulated depreciation-equipment
(99,110.00)
(84,320.00)
10
Total assets
$1,211,760.00
$901,680.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$205,700.00
$194,140.00
13
Accrued expenses payable (operating expenses)
30,600.00
26,860.00
14
Dividends payable
25,500.00
20,400.00
15
Common stock, $1 par
202,000.00
102,000.00
16
Paid-in capital: Excess of issue price over par—common stock
354,000.00
204,000.00
17
Retained earnings
393,960.00
354,280.00
18
Total liabilities and stockholders’ equity
$1,211,760.00
$901,680.00
Explanation / Answer
Merrick Equipment Co. Statement of Cash Flows For the Year Ended December 31, 2016 1 Cash flows from operating activities: 2 Net Income 141680 3 Adjustments to reconcile net income to net cash flow from operating activities: 4 Depreciation (99110-84320) 14790 5 Loss on sale of investments 10200 6 Changes in current operating assets and liabilities: 7 Increase in Account receivable -19040 8 Increase in Invetories -8670 9 Increase in Account payab;e 11560 10 Increase in accrued expenses payable 3740 11 Net cash flow from operating activities 154260 12 13 Cash flows from investing activities: 14 Cash received from sale of investments 91800 15 Cash paid for purchase of land -295800 16 Cash paid for purchase of equipment -80580 17 Net cash flow from investing activities -284580 18 19 Cash flows from financing activities: 20 Cash received from sale of common stock (204000+3548280-354000-393960) 250000 21 cash Dividend Paid ((-25500+102000+20400)) -96900 22 Net cash flow from financing activities 153100 23 Increase in Cash 22780 24 Cash at the beginning of the year 47940 25 Cash at the end of the year 70720