PR 13-1B Statement of cash flows-indirect method The comparative balance sheet o

Question

PR 13-1B Statement of cash flows-indirect method The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and Obj. 2, 3, 4, 5 20Y8, ash flow from acivitien is as follows 5154,260 Is as Dec. 31,20Y9 Dec. 31, 20Y8 Assets Cash Accounts Inventories Investments . Land . ...$ 70,720 $ 47,940 188,190 289,850 receivable (net).. BITCEL TEMPLATE 207,230 298,520 . .. 102000 358,020 295800 295,800 438,600 Accumulated depreciation-equipment Total assets . . . . $1,211,760 Liabilities and Stockholders'Equity Accounts payable (merchandise creditors) . . . . .. . . . . . . . . . . . . . . . Accrued expenses payable (operating expenses) . . . . . . . . . … $ $194,140 205,700 30,600 25,500 202,000 354,000 102,000 204,000 354,280 $901,680 Paid-in capital: Excess of issue price over par-common stock.... Retained earnings Total liabilities and stockholders'equity... 51211.760 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 $141,680 credit to Retained Earnings for net income. F. There was a $102,000 debit to Retained Earnings for cash dividends declared Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Explanation / Answer

Merrick equipment Co

Statement of cash flows for the year ended December 31, 2019

Cost of investments $102000

sale of investments ($91800)

Loss on sale $10200.

Particulars Amount($) Amount($) Cash flows from operating activities: Net income 141680 Depreciation 14790 Loss on sale of investments 10200 Less: increase accounts receivable (19040) increase inventories (8670) Add: increase accounts payable 11560 increase accrued expenses payable 3740 increase dividends payable 5100 Net cash flows provided by operating activities $159360 Cash flows from investing activities: Sale of investments 91800 Purchase of land (295800) Purchase of equipment (80580) Net cash flows used by investing activities (125220) Cash flows from financing activities: Issue of common stock 100000 Issue of paid in capital 150000 Dividend paid (102000) Net cash flows provided by financing activities 22780 Add: beginning cash balance 47940 Ending cash balance 70720

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