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 $70,720   $47,940   Accounts receivable (net) 207,230   188,190   Inventories 298,520   289,850   Investments 0   102,000   Land 295,800   0   Equipment 438,600   358,020   Accumulated depreciation—equipment (99,110)   (84,320)     Total assets $1,211,760   $901,680         Liabilities and Stockholders' Equity     Accounts payable (merchandise creditors) $205,700   $194,140   Accrued expenses payable (operating expenses) 30,600   26,860   Dividends payable 25,500   20,400   Common stock, $1 par 202,000   102,000   Paid-in capital: Excess of issue price over par—common stock 354,000   204,000   Retained earnings 393,960   354,280     Total liabilities and stockholders' equity $1,211,760   $901,680   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 $91,800 cash. The common stock was issued for cash. There was a $141,680 credit to Retained Earnings for net income. There was a $102,000 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.

Question

 

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 $70,720   $47,940  
Accounts receivable (net) 207,230   188,190  
Inventories 298,520   289,850  
Investments 0   102,000  
Land 295,800   0  
Equipment 438,600   358,020  
Accumulated depreciation—equipment (99,110)   (84,320)  
  Total assets $1,211,760   $901,680  
     
Liabilities and Stockholders' Equity    
Accounts payable (merchandise creditors) $205,700   $194,140  
Accrued expenses payable (operating expenses) 30,600   26,860  
Dividends payable 25,500   20,400  
Common stock, $1 par 202,000   102,000  
Paid-in capital: Excess of issue price over par—common stock 354,000   204,000  
Retained earnings 393,960   354,280  
  Total liabilities and stockholders' equity $1,211,760   $901,680  

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 $91,800 cash.
  4. The common stock was issued for cash.
  5. There was a $141,680 credit to Retained Earnings for net income.
  6. There was a $102,000 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.

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