Statement of Cash Flows—Indirect MethodThe comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows: Dec. 31, 20Y9Dec. 31, 20Y8Assets  Cash$276,220 $257,240 Accounts receivable (net)100,060 92,390 Inventories282,470 273,550 Investments0 105,980 Land144,890 0 Equipment311,660 241,850 Accumulated depreciation—equipment(72,960) (65,220)  Total assets$1,042,340 $905,790    Liabilities and Stockholders' Equity  Accounts payable$188,660 $178,440 Accrued expenses payable18,760 23,550 Dividends payable10,420 8,150 Common stock, $10 par56,290 44,380 Paid-in capital: Excess of issue price over par-common stock211,600 123,190 Retained earnings556,610 528,080  Total liabilities and stockholders’ equity$1,042,340 $905,790 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 $95,380 cash.The common stock was issued for cash.There was a $71,100 credit to Retained Earnings for net income.There was a $42,570 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 outflows, cash payments, decreases in cash, or any negative adjustments.Merrick Equipment Co.Statement of Cash FlowsFor the Year Ended December 31, 20Y9Cash flows from operating activities:   $ Adjustments to reconcile net income to net cash flow from operating activities:        Changes in current operating assets and liabilities:              Net cash flow from operating activities $Cash flows from (used for) investing activities:  Cash from sale of investments $       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

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Asked Nov 21, 2019
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Statement 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
Assets    
Cash $276,220   $257,240  
Accounts receivable (net) 100,060   92,390  
Inventories 282,470   273,550  
Investments 0   105,980  
Land 144,890   0  
Equipment 311,660   241,850  
Accumulated depreciation—equipment (72,960)   (65,220)  
  Total assets $1,042,340   $905,790  
     
Liabilities and Stockholders' Equity    
Accounts payable $188,660   $178,440  
Accrued expenses payable 18,760   23,550  
Dividends payable 10,420   8,150  
Common stock, $10 par 56,290   44,380  
Paid-in capital: Excess of issue price over par-common stock 211,600   123,190  
Retained earnings 556,610   528,080  
  Total liabilities and stockholders’ equity $1,042,340   $905,790  

Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:

  1. Equipment and land were acquired for cash.
  2. There were no disposals of equipment during the year.
  3. The investments were sold for $95,380 cash.
  4. The common stock was issued for cash.
  5. There was a $71,100 credit to Retained Earnings for net income.
  6. There was a $42,570 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 outflows, 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 liabilities:    
     
     
     
     
Net cash flow from operating activities   $
Cash flows from (used for) investing activities:    
Cash from sale of investments  $  
     
     
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  
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Expert Answer

Step 1

Cash Flow Statement:

Cash flow statement is the financial statement that measures the cash generated or used by a company in a given period. It breaks out a company’s cash sources and uses for the period into three categories:

  1. Cash flow from Operating Activities
  2. Cash flow from Investing Activities
  3. Cash flow from Financing Activities
Step 2

Following is the cash flow statem...

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M's Equipment Company Statement of cash flows For the year ended December 31, 20Y9 Cash flow from Operating Activities: Net Income Adjustment to reconcile Net Income to Net cash flow from Operating Activities Depreciation Loss on sale of investment Change in Current operating Assets and Liabilities Increase in Account receivable Increase in Inventories Increase in Account Payable Decrease in Accrued Expenses payable Net Cash flow from Operating Activities (a) $71,100 $7.740 $10,600 -$7.670 -$8.920 $10,220 -$4,790 $7.180 $78.280 Cash flow from Investing Activities Sale of Investment Purchase of Equipment Purchase of Land Net Cash flow from Investing Activities (b) $95,380 $69,810 -$144,890 si19.320 Cash flow from Financing Activities: Issuance of common stock Dividend paid Net Cash flow from Financing Activities (c) $100,320 -$40,300 $60.020 Net Increase/Decrease in Cash (a +b + c) Add: Cash Balance at the beginning of the year Cash balance at the end of the year $18,980 $257,240 $276.220

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