. The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is as follows:Dec. 31, 20Y9Dec. 31, 20Y8AssetsCash$70,720$47,940Accounts receivable (net)207,230188,190Inventories298,520289,850Investments102,000Land295,800Equipment438,600358,020Accumulated depreciation-equipment(99,110)(84,320)Total assets$1,211,760$901,680Liabilities and Stockholders' EquityAccounts payable$205,700$194,140Accrued expenses payable30,60026,860Dividends payable25,50020,400Common stock, $1 par202,000102,000Excess of paid-in capital over par354,000204,000Retained earnings393,960354,280Total liabilities and stockholders' equity$1,211,760$901,680The income statement for the year ended December 31, 20Y9, is as follows:Sales$2,023,898Cost of merchandise sold1,245,476Gross profit$778,422Operating expenses:Depreciation expense$14,790Other operating expenses517,299Total operating expenses532,089Operating income$246,333 Operating income$246,333Other expenses:Loss on sale of investments(10,200)Income before income tax$236,133Income tax expense94,453Net income$141,680Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:a. Equipment and land were acquired for cash.b. There were no disposals of equipment during the year.c. The investments were sold for $91,800 cash.d. The common stock was issued for cash.e. There was a $102,000 debit to Retained Earnings for cash dividends declared.Required:Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) 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 (used for) operating activities:Cash received from customers vCash paid for merchandise vCash paid for operating expenses vCash paid for income taxes vNet cash flows from operating activitiesCash flows from (used for) investing activities:Cash received from sale of investments vCash paid for purchase of land vCash paid for purchase of equipment vNet cash flows used for investing activitiesCash flows from (used for) financing activities:Cash received from issuing common stock vCash dividends vNet cash flows from financing activitiesNet increase in cash vCash balance, January 1, 20Y9Cash balance, December 31, 20Y9

CFS records all the cash receipts and payments. It can be prepared using direct and indirect method.

The comparative balance sheet of Merrick Equipment Co. for Dec. 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 102,000 Land 295,800 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 $205,700 $194,140 Accrued expenses payable 30,600 26,860 Dividends payable 25,500 20,400 Common stock, $1 par 202,000 102,000 Excess of paid-in capital over par 354,000 204,000 Retained earnings 393,960 354,280 Total liabilities and stockholders' equity $1,211,760 $901,680 The income statement for the year ended December 31, 20Y9, is as follows: Sales $2,023,898 Cost of merchandise sold 1,245,476 Gross profit $778,422 Operating expenses: Depreciation expense $14,790 Other operating expenses 517,299 Total operating expenses 532,089 Operating income $246,333

The comparative balance sheet of Merrick Equipment Co. for Dec. 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 102,000 Land 295,800 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 $205,700 $194,140 Accrued expenses payable 30,600 26,860 Dividends payable 25,500 20,400 Common stock, $1 par 202,000 102,000 Excess of paid-in capital over par 354,000 204,000 Retained earnings 393,960 354,280 Total liabilities and stockholders' equity $1,211,760 $901,680 The income statement for the year ended December 31, 20Y9, is as follows: Sales $2,023,898 Cost of merchandise sold 1,245,476 Gross profit $778,422 Operating expenses: Depreciation expense $14,790 Other operating expenses 517,299 Total operating expenses 532,089 Operating income $246,333

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 6MCQ

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