Show Me How of Cash Flows-Indirect Method The comparative balance sheet of Merri
ID: 2436416 • Letter: S
Question
Show Me How of Cash Flows-Indirect Method The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows Dec. 31, 20Y9 Dec. 31, 20Y8 Cash $237,500 $221,690 86,040 79,620 242,860 235,740 91,330 Investments Land Equipment Accumulated depreciation-equipment 124,570 267,970 208,420 (62,730) (56,200) $896,210 $780,600 Total assets lders' Equity Accounts payable Accrued expenses payable Dividends payable Common stock, $10 par $162,210 $153,780 16,130 20,300 8,9607,030 48,400 38,250 181,930 106,160 478,580 455,080 $896,210 $780,600 Retained earnings Total liabilities and stockholders' equity I data obtained from an examination of the accounts in the ledger for 20Y9 are as follows Previous
Explanation / Answer
Merrick Equipment Co. Statement of Cash Flows For the Year Ended December 20Y9 Cash flows from operating activities: Net income 60190 Adjustments to reconcile net income to net cash from operating activities: Depreciation ($62730 - 56200) 6530 Loss on sale of investments ($91330 - 82200) 9130 Changes in current operating assets and liabilities: Increase in accounts receivable -6420 Increase in inventories -7120 Increase in accounts payable 8430 Decrease in accrued expenses payable -4170 Net cash flow from operating activities 66570 Cash flows from (used for) investing activities: Cash received from sale of investments 82200 Cash used for purchase of land -124570 Cash used for purchase of equipment ($267970 - 208420) -59550 Net cash flow used for investing activities -101920 Cash flows from (used for) financing activities: Cash from sale of common stock ($48400 + 181930 - 38250 - 106160) 85920 Cash used for dividends ($7030 + 36690 - 8960) -34760 Net cash flow from financing activities 51160 Net increase (decrease) in cash 15810 Cash at the beginning of the year 221690 Cash at the end of the year 237500