The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and
ID: 2414144 • Letter: T
Question
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 $873,700Explanation / Answer
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