Statement of Cash FlowsA method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments Indirect Method 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 $226,540 $212,430 Accounts receivable (net) 82,070 76,300 Inventories 231,660 225,890 Investments 0 87,520 Land 118,830 0 Equipment 255,600 199,720 Accumulated depreciationequipment (59,840) (53,860) Total assets $854,860 $748,000 Liabilities and Stockholders' Equity Accounts payable $154,730 $147,360 Accrued expenses payable 15,390 19,450 Dividends payable 8,550 6,730 Common stock, $10 par 46,160 36,650 Paid in capital Excess of issue price over par common stock 173,540 101,730 Retained earnings 456,490 436,080 Total liabilities and stockholders equity $854,860 $748,000 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 $78,770 cash The common stock was issued for cash There was a $55,570 credit to Retained Earnings for net income There was a $35,160 debit to Retained Earnings for cash dividends declared Required Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income cash flows from 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 Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities Net income Cash used for dividends Cash paid for land Cash from sale of investments Cash from sale of common stock Loss on sale of investments Net income $ Adjustments to reconcile net income to net cash flow from operating activities Depreciation Accumulated depreciation Cash paid for land Cash used for dividends Cash from sale of common stock Depreciation Retained earnings Loss on sale of investments Cash used for dividends Cash received from the sale of common stock Cash received from net income Gain on sale of investments Loss on sale of investments Retained earnings Changes in current operating assets and liabilities Increase in accounts receivable Decrease in accounts receivable Decrease in accounts payable Decrease in inventories Depreciation Increase in accounts receivable Loss on sale of investments Increase in inventories Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Gain on sale of investments Increase in accrued expenses Increase in inventories Increase in accounts payable Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in accounts payable Increase in accrued expenses Loss on sale of investments Decrease in accrued expenses payable Decrease in accounts payable Decrease in accrued expenses payable Decrease in dividends payable Depreciation Increase in accrued expenses payable Increase in land Net cash flow from operating activities $ Cash flows from (used for) investing activities Cash from sale of investments Cash received from gain on sale of investments Cash received from loss on sale of investments Cash received from net income Cash from sale of common stock Cash from sale of investments Cash received from retained earnings $ Cash used for purchase of land Cash paid for accounts payable Cash paid for accumulated depreciation Cash paid for common stock Cash paid for depreciation Cash used for dividends Cash used for purchase of land Cash used for purchase of equipment Cash paid for accounts receivable Cash paid for accrued expenses Cash paid for accumulated depreciation Cash paid for inventories Cash used for purchase of equipment Cash paid for retained earnings Net cash flow used for investing activities Cash flows from (used for) financing activities Cash from sale of common stock Cash received from net income Cash from sale of common stock Cash received from sale of equipment Cash received from sale of inventories Cash from sale of investments Cash received from retained earnings Cash used for dividends Cash used for dividends Cash paid for inventories Cash used for purchase of equipment Cash paid for purchase of investments Cash used for purchase of land Cash paid for retained earnings Net cash flow from financing activities Increase in cash Decrease in cash Increase in cash $ Cash at the beginning of the year Cash at the end of the year $ Feedback The statement of cash flows reports three types of cash flow activities, as follows 1 Cash flows from operating activities are the cash flows from transactions that affect the net income of the company 2 Cash flows from (used for) investing activities are the cash flows received from or used for transactions that affect investments in the noncurrent assets of the company 3 Cash flows from (used for) financing activities are the cash flows received from or used for transactions that affect the debt and equity of the company The indirect method reports cash flows from operating activities by beginning with net income and adjusting it for revenues and expenses that do not involve the receipt or payment of cash A primary advantage of the indirect method is that it reconciles the differences between net income and net cash flows from operations Calculate the increases and decreases in the current asset liability accounts over the period How do these increases or decreases impact the amount of cash a company has Were there any purchases or sales of noncurrent assets during the year If there were any sales of noncurrent assets, were these noncurrent assets sold at what the company had initially paid Or were the assets sold for more or less than the book value Did the company engage in any activities that affected the equity or debt in their company Loading item There was an error loading this item If this continues to occur, please contact Technical Support Check My Work Previous Next 100 Correct Partially Correct Incorrect Needs Instructor Grading Basic Calculatorclose 0 UseEntBSBSpCEHomCEnd 789 456 123 0

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Statement of Cash FlowsA method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past

Statement of Cash FlowsA method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method

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		$226,540	$212,430
Accounts receivable (net)		82,070	76,300
Inventories		231,660	225,890
Investments		0	87,520
Land		118,830	0
Equipment		255,600	199,720
Accumulated depreciationequipment		(59,840)	(53,860)
	Total assets	$854,860	$748,000

Liabilities and Stockholders' Equity
Accounts payable		$154,730	$147,360
Accrued expenses payable		15,390	19,450
Dividends payable		8,550	6,730
Common stock, $10 par		46,160	36,650
Paid-in capital: Excess of issue price over par-common stock		173,540	101,730
Retained earnings		456,490	436,080
	Total liabilities and stockholders equity	$854,860	$748,000

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 $78,770 cash.
The common stock was issued for cash.
There was a $55,570 credit to Retained Earnings for net income.
There was a $35,160 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.cash flows from 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 Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net income Cash used for dividends Cash paid for land Cash from sale of investments Cash from sale of common stock Loss on sale of investments Net income	$
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation Accumulated depreciation Cash paid for land Cash used for dividends Cash from sale of common stock Depreciation Retained earnings
Loss on sale of investments Cash used for dividends Cash received from the sale of common stock Cash received from net income Gain on sale of investments Loss on sale of investments Retained earnings
Changes in current operating assets and liabilities:
Increase in accounts receivable Decrease in accounts receivable Decrease in accounts payable Decrease in inventories Depreciation Increase in accounts receivable Loss on sale of investments
Increase in inventories Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Gain on sale of investments Increase in accrued expenses Increase in inventories
Increase in accounts payable Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in accounts payable Increase in accrued expenses Loss on sale of investments
Decrease in accrued expenses payable Decrease in accounts payable Decrease in accrued expenses payable Decrease in dividends payable Depreciation Increase in accrued expenses payable Increase in land
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
Cash from sale of investments Cash received from gain on sale of investments Cash received from loss on sale of investments Cash received from net income Cash from sale of common stock Cash from sale of investments Cash received from retained earnings	$
Cash used for purchase of land Cash paid for accounts payable Cash paid for accumulated depreciation Cash paid for common stock Cash paid for depreciation Cash used for dividends Cash used for purchase of land
Cash used for purchase of equipment Cash paid for accounts receivable Cash paid for accrued expenses Cash paid for accumulated depreciation Cash paid for inventories Cash used for purchase of equipment Cash paid for retained earnings
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Cash from sale of common stock Cash received from net income Cash from sale of common stock Cash received from sale of equipment Cash received from sale of inventories Cash from sale of investments Cash received from retained earnings
Cash used for dividends Cash used for dividends Cash paid for inventories Cash used for purchase of equipment Cash paid for purchase of investments Cash used for purchase of land Cash paid for retained earnings
Net cash flow from financing activities
Increase in cash Decrease in cash Increase in cash		$
Cash at the beginning of the year
Cash at the end of the year		$

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The statement of cash flows reports three types of cash flow activities, as follows: 1. Cash flows from operating activities are the cash flows from transactions that affect the net income of the company. 2. Cash flows from (used for) investing activities are the cash flows received from or used for transactions that affect investments in the noncurrent assets of the company. 3. Cash flows from (used for) financing activities are the cash flows received from or used for transactions that affect the debt and equity of the company. The indirect method reports cash flows from operating activities by beginning with net income and adjusting it for revenues and expenses that do not involve the receipt or payment of cash. A primary advantage of the indirect method is that it reconciles the differences between net income and net cash flows from operations. Calculate the increases and decreases in the current asset/liability accounts over the period. How do these increases or decreases impact the amount of cash a company has? Were there any purchases or sales of noncurrent assets during the year? If there were any sales of noncurrent assets, were these noncurrent assets sold at what the company had initially paid? Or were the assets sold for more or less than the book value? Did the company engage in any activities that affected the equity or debt in their company?

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