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 $269,540 $251,600 Accounts receivable (net) 97,640 90,360 Inventories 275,640 267,550 Investments 0 103,650 Land 141,380 0 Equipment 304,120 236,540 Accumulated depreciation—equipment (71,200) (63,790) Total assets $1,017,120 $885,910 Liabilities and Stockholders' Equity Accounts payable $184,100 $174,520 Accrued expenses payable 18,310 23,030 Dividends payable 10,170 7,970 Common stock, $10 par 54,920 43,410 Excess of paid-in capital over par 206,480 120,480 Retained earnings 543,140 516,500 Total liabilities and stockholders' equity $1,017,120 $885,910 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 $93,290 cash. The common stock was issued for cash. There was a $68,280 credit to Retained Earnings for net income. There was a $41,640 debit to Retained Earnings for cash dividends declared. Required: Prepare a statement of cash flows, using the indirect 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, 20Y9 Cash flows from (used for) operating activities: blank Cash dividendsCash paid for landCash received from issuing common stockCash received from sale of investmentsNet incomeNet income $Net income Adjustments to reconcile net income to net cash flows from (used for) operating activities: blank Cash dividendsCash paid for landCash received from issuing common stockDepreciationRetained earnings - Select - Cash received from net incomeCash received from the sale of common stockGain on sale of investmentsLoss on sale of investmentsRetained earnings - Select - Changes in current operating assets and liabilities: blank Decrease in accounts payableDecrease in accounts receivableDecrease in inventoriesIncrease in accounts receivableLoss on sale of investmentsDecrease in inventories Decrease in inventories Decrease in accounts payableDecrease in accounts receivableDecrease in inventoriesGain on sale of investmentsIncrease in inventoriesDecrease in accounts payable Decrease in accounts payable Decrease in accounts payableDecrease in accounts receivableDecrease in accrued expensesDecrease in inventoriesIncrease in accounts payableDecrease in accounts payable Decrease in accounts payable Decrease in accounts payableDecrease in accrued expenses payableDecrease in dividends payableDepreciationIncrease in accrued expenses payableDecrease in accrued expenses payable Decrease in accrued expenses payable Net cash flows from operating activities blank $fill in the blank 15 Cash flows from (used for) investing activities: blank Cash received from gain on sale of investmentsCash received from issuing common stockCash received from loss on sale of investmentsCash received from sale of investmentsCash received from retained earningsCash received from loss on sale of investments $Cash received from loss on sale of investments Cash paid for accounts payableCash paid for accumulated depreciationCash paid for common stockCash paid for depreciationCash paid for purchase of landCash paid for accumulated depreciation Cash paid for accumulated depreciation Cash paid for accounts receivableCash paid for accrued expensesCash paid for accumulated depreciationCash paid for inventoriesCash paid for purchase of equipment - Select - Net cash flows used for investing activities blank fill in the blank 22 Cash flows from (used for) financing activities: blank Cash received from issuing common stockCash received from net incomeCash received from sale of equipmentCash received from sale of inventoriesCash received from sale of investmentsCash received from sale of equipment $Cash received from sale of equipment Cash dividendsCash paid for inventoriesCash paid for purchase of equipmentCash paid for purchase of investmentsCash paid for purchase of landCash paid for purchase of investments Cash paid for purchase of investments Net cash flows from financing activities blank fill in the blank 27 Net decrease in cashNet increase in cash blank $- Select - Cash balance, January 1, 20Y9 blank fill in the blank 30 Cash balance, December 31, 20Y9
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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 | $269,540 | $251,600 | ||
| Accounts receivable (net) | 97,640 | 90,360 | ||
| Inventories | 275,640 | 267,550 | ||
| Investments | 0 | 103,650 | ||
| Land | 141,380 | 0 | ||
| Equipment | 304,120 | 236,540 | ||
| Accumulated |
(71,200) | (63,790) | ||
| Total assets | $1,017,120 | $885,910 | ||
| Liabilities and |
||||
| Accounts payable | $184,100 | $174,520 | ||
| Accrued expenses payable | 18,310 | 23,030 | ||
| Dividends payable | 10,170 | 7,970 | ||
| Common stock, $10 par | 54,920 | 43,410 | ||
| Excess of paid-in capital over par | 206,480 | 120,480 | ||
| 543,140 | 516,500 | |||
| Total liabilities and stockholders' equity | $1,017,120 | $885,910 |
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 $93,290 cash.
The common stock was issued for cash.
There was a $68,280 credit to Retained Earnings for net income.
There was a $41,640 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of
| Cash flows from (used for) operating activities: | blank | |
|
Cash dividendsCash paid for landCash received from issuing common stockCash received from sale of investmentsNet incomeNet income |
$Net income | |
| Adjustments to reconcile net income to net cash flows from (used for) operating activities: | blank | |
|
Cash dividendsCash paid for landCash received from issuing common stockDepreciationRetained earnings |
- Select - | |
|
Cash received from net incomeCash received from the sale of common stockGain on sale of investmentsLoss on sale of investmentsRetained earnings |
- Select - | |
| Changes in current operating assets and liabilities: | blank | |
|
Decrease in accounts payableDecrease in accounts receivableDecrease in inventoriesIncrease in accounts receivableLoss on sale of investmentsDecrease in inventories |
Decrease in inventories | |
|
Decrease in accounts payableDecrease in accounts receivableDecrease in inventoriesGain on sale of investmentsIncrease in inventoriesDecrease in accounts payable |
Decrease in accounts payable | |
|
Decrease in accounts payableDecrease in accounts receivableDecrease in accrued expensesDecrease in inventoriesIncrease in accounts payableDecrease in accounts payable |
Decrease in accounts payable | |
|
Decrease in accounts payableDecrease in accrued expenses payableDecrease in dividends payableDepreciationIncrease in accrued expenses payableDecrease in accrued expenses payable |
Decrease in accrued expenses payable | |
| Net cash flows from operating activities | blank | $fill in the blank 15 |
| Cash flows from (used for) investing activities: | blank | |
|
Cash received from gain on sale of investmentsCash received from issuing common stockCash received from loss on sale of investmentsCash received from sale of investmentsCash received from retained earningsCash received from loss on sale of investments |
$Cash received from loss on sale of investments | |
|
Cash paid for accounts payableCash paid for accumulated depreciationCash paid for common stockCash paid for depreciationCash paid for purchase of landCash paid for accumulated depreciation |
Cash paid for accumulated depreciation | |
|
Cash paid for accounts receivableCash paid for accrued expensesCash paid for accumulated depreciationCash paid for inventoriesCash paid for purchase of equipment |
- Select - | |
| Net cash flows used for investing activities | blank | fill in the blank 22 |
| Cash flows from (used for) financing activities: | blank | |
|
Cash received from issuing common stockCash received from net incomeCash received from sale of equipmentCash received from sale of inventoriesCash received from sale of investmentsCash received from sale of equipment |
$Cash received from sale of equipment | |
|
Cash dividendsCash paid for inventoriesCash paid for purchase of equipmentCash paid for purchase of investmentsCash paid for purchase of landCash paid for purchase of investments |
Cash paid for purchase of investments | |
| Net cash flows from financing activities | blank | fill in the blank 27 |
|
Net decrease in cashNet increase in cash |
blank | $- Select - |
| Cash balance, January 1, 20Y9 | blank | fill in the blank 30 |
| Cash balance, December 31, 20Y9 |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
