close solutoin list

Statement of cash flows—direct method applied to PR 16–18 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.............................................. 0 102,000 Land..................................................... 295,800 0 Equipment................................................ 438,600 358,020 Accumulated depreciation—equipment.................... (99,110) (184,320) 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 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 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 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

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 16, Problem 16.5BPR
Textbook Problem

Statement of cash flows—direct method applied to PR 16–18

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.............................................. 0 102,000
Land..................................................... 295,800 0
Equipment................................................ 438,600 358,020
Accumulated depreciation—equipment.................... (99,110) (184,320)
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
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 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
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.

Expert Solution

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 16 Solutions

Accounting
Show all chapter solutions
Ch. 16 - Classifying cash flows Identify whether each of...Ch. 16 - Classifying cash flows Identify whether each of...Ch. 16 - Adjustments to net incomeindirect method Ripley...Ch. 16 - Adjustments to net incomeindirect method Ya Wen...Ch. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Cash received from customersdirect method Sales...Ch. 16 - Cash received from customersdirect method Sales...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Free cash flow McMahon Inc. reported the following...Ch. 16 - Free cash flow Dillin Inc. reported the following...Ch. 16 - Cash flows from operating activities On its income...Ch. 16 - Effect of transactions on cash flows State the...Ch. 16 - Classifying cash flows Identify the type of cash...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Reporting land transactions on statement of cash...Ch. 16 - Reporting stockholders equity items on statement...Ch. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Determining net income from net cash flow from...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Cash flows from operating activitiesdirect method...Ch. 16 - Cash paid for merchandise purchases The cost of...Ch. 16 - Determining selected amounts for cash flows from...Ch. 16 - Cash flows from operating activitiesdirect method...Ch. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Free cash flow Sweeter Enterprises Inc. has cash...Ch. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to PR...Ch. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Communication Tidewater Inc., a retailer, provided...Ch. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
FREE CASH FLOW Financial information for Powell Panther Corporation is shown here. Powell Panther Corporation: ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)