Merrick Company Began Operations in 2012 by Issuing Common Stock

question 119

Essay

Merrick Company began operations in 2012 by issuing common stock for $400 cash.During the year,Merrick Company purchased $800 of merchandise on account.It sold for $920 cash inventory that had cost $650.It paid off $500 on its account payable and also paid $180 cash for operating expenses.
Required:
a)Record the events in the statements model,below.Show amounts of increases and decreases.Indicate whether each cash flow is an operating activity,investing activity,or financing activity. b)Prepare the 2012 income statement for Merrick using a multistep format.

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Definitions:

Book Value

The worth of an asset as indicated by its balance sheet account balance, which considers the asset's original cost less any depreciation, amortization, or impairment charges.

Dividends in Arrears

Unpaid dividends on preferred stock that accumulate until paid by the corporation, often before any dividends can be paid on common stock.

Par Value

A nominal or face value assigned to a share of stock, bonds, or other securities as stated in the corporate charter or on the stock certificate.

Dividend Rate

The amount of dividend that a company pays out to its shareholders annually, usually expressed as a percentage of the stock's current market price or as a fixed amount per share.