Statement of Cash Flows-Indirect Method The comparative balance sheet of Merrick Equipment Co. for December 31, 2019 and 20Y8, is as follows: Dec. 31, 2049 Dec. 31, 2018 Assets Cash Accounts receivable (net) Inventories Investments Land $317,810 115,130 325,020 $293,260 105,330 311,850 120,810 Equipment Accumulated depreciation-equipment Total assets 166,700 358,590 (83,950) $1,199,300 275,700 (74,350) $1,032,600 Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Dividends payable Common stock, $10 par Paid-in capital: Excess of issue price over par-common stock Retained earnings Total liabilities and stockholders' equity $217,070 21,590 11,990 64,760 243,460 640,430 $1,199,300 $203,420 26,850 9,290 50,600 140,430 602,010 $1,032,600 Additional data obtained from an examination of the accounts in the ledger for 2049 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 $108,730 cash. d. The common stock was issued for cash. e. There was a $86,950 credit to Retained Earnings for net income. f. There was a $48,530 debit to Retained Earnings for cash dividends declared. 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, decreases in cash, or any negative adjustments. Merrick Equipment Co. Statement of Cash Flows For the Year Ended December 31, 2019 Cash flows from operating activities: Net income 86,950 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Loss on sale of investments 9,600 12,080 Changes in current operating assets and liabilities: Increase in accounts receivable 9,800 Increase in inventories 13,170 x Increase in accounts payable 13,650 Decrease in accrued expenses payable 5,260 x $ 94,050 Net cash flow from operating activities Cash flows from (used for) investing activities: Cash from sale of investments 108,730 Cash used for purchase of land 166,700 Cash used for purchase of equipment 82,890 140,860 x Net cash flow used for investing activities Cash flows from (used for) financing activities: Cash from sale of common stock 117,190 45,830 Cash used for dividends x Net cash flow from financing activities Increase in cash 71,360 24,550 293,260 317,810 Cash at the beginning of the year Cash at the end of the year
