Statement of Cash Flows—Indirect Method

Merrick Equipment Co.'s comparative balance sheet as of December 31, 20Y9 and 20Y8 is as follows:

		December 31, 20Y9		December 31, 20Y8
Assets
Money		$223,980		$207,870
Accounts receivable (net)		81,140		74,660
inventories		229,040		221,030
Investments		0		85,640
Tierra		117,480		0
Equipment		252,710		195.430
Accumulated Depreciation—Equipment		(59,160)		(52,700)
	total assets	$ 845,190		$731,930
Liabilities and Equity
Accounts payable		$152,980		$144,190
Accumulated charges to pay		15,210		19,030
payable dividends		8,450		6,590
Common shares, $10 a par		45,640		35,860
Paid-in capital: Excess of the issue price over ordinary shares at par		171,570		99,540
Retained earnings		451,340		426,720
	Total liabilities and stockholders' equity	$ 845,190		$731,930

Additional data obtained from an examination of the general ledger accounts for 20Y9 are as follows:

Equipment and land were purchased for cash.

There were no equipment disposals during the year.

The investments were sold for $77,080 cash.

Common shares were issued in cash.

There was a credit of $59,020 to Retained Earnings for net income.

There was a debit of $34,400 to retained earnings for declared cash dividends.

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 outflows, cash payments, cash decreases, or any negative adjustments.

Merrick Equipment Co.
Statement of cash flows
For the year ended December 31, 20Y9
Cash flows from operating activities:
	ps
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities		ps
Cash flows from (used for) investing activities:
	ps
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Net cash flow from financing activities
		ps
Effective at the beginning of the year
Effective at the end of the year		ps

Answer rating: 100% (QA)

Note Cash Flow Statement is prepared to know the movement of cash between two points of time Cash fl... View the full answer