Statement of cash flows—direct method applied to PR 13–1B The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is: 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 The income statement for the year ended December 31,20Y9, is as fallow s: Sales $2,023,898 Cost of goods 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 Other expenses: Loss on sale of investments (10,200) Income before income tax $ 236,133 Income tax expense 94,453 Net income $ 141,680 Additional 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. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 13, Problem 13.5BPR
Textbook Problem

Statement of cash flows—direct method applied to PR 13–1B

The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is:

  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
The income statement for the year ended December 31,20Y9, is as fallow s:
Sales   $2,023,898
Cost of goods 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
Other expenses:    
Loss on sale of investments   (10,200)
Income before income tax   $ 236,133
Income tax expense   94,453
Net income   $ 141,680

Additional 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.

Instructions

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

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Chapter 13 Solutions

Financial & Managerial Accounting
Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Changes in current operating assets and...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Cash received from customersdirect method Sales...Ch. 13 - Cash payments for merchandisedirect method The...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activities indirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting land transactions on statement of cash...Ch. 13 - Determining cash payments to stockholders The...Ch. 13 - Reporting stockholders' equity items on statement...Ch. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Determining net income from net cash flow from...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Determining selected amounts for cash flows from...Ch. 13 - Cash flows from operating activities direct method...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsdirect method The...Ch. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 13 - RadioShack: Free cash flow RadioShack Corporation...Ch. 13 - ATT and Facebook: Free cash flow ATT Inc. is a...Ch. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...

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