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Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash	$	3			$	12
Accounts receivable		307				231
Inventory		157				196
Prepaid expenses		9				6
Total current assets		476				445
Property, plant, and equipment		504				425
Less accumulated depreciation		(85	)			(72	)
Net property, plant, and equipment		419				353
Long-term investments		29				35
Total assets	$	924			$	833
Liabilities and Stockholders' Equity
Accounts payable	$	301			$	225
Accrued liabilities		71				78
Income taxes payable		75				64
Total current liabilities		447				367
Bonds payable		195				171
Total liabilities		642				538
Common stock		162				201
Retained earnings		120				94
Total stockholders’ equity		282				295
Total liabilities and stockholders' equity	$	924			$	833

Weaver Company Income Statement For This Year Ended December 31
Sales					$	753
Cost of goods sold						447
Gross margin						306
Selling and administrative expenses						222
Net operating income						84
Nonoperating items:
Gain on sale of investments	$	7
Loss on sale of equipment		(2	)			5
Income before taxes						89
Income taxes						24
Net income					$	65

During this year, Weaver sold some equipment for $18 that had cost $30 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $13 that had cost $6 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $39 of its own stock. This year Weaver did not retire any bonds.

2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.)

Answer 1

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Cashflow statement	$ Million			Workings
Particulars				Equipment purchased
Net Income	65.00			Opening Balance (Net)	353.00
Add: Loss on sale of equipment	2.00			Less: Net Value of equipment sold (30-10)	20.00
Add: Depreciation Expense	23.00	See Workings		Less: Depreciation Expense	23.00
Less: Gain on sale of investment	7.00				310.00
	83.00			Closing Balance	419.00
Changes in Current Assets/Current Liabilities				Equipment purchased	109.00
Increase in Accounts Receivable	(76.00)
Decrease in Inventory	39.00			Depreciation Expense
Increase in Prepaid Expense	(3.00)			Opening Accumulated Depreciation	72.00
Increase in Accounts Payable	76.00			Accumulated Depreciation on equipment sold	10.00
Decrease in Accrued Liabilities	(7.00)				62.00
Increase in Income Tax Payable	11.00			Closing Accumulated Depreciation	85.00
Net Cash flow from operating activities	123.00			Equipment purchased	23.00
Equipment sold	18.00			Dividend Paid
Equipment Purchased	(109.00)	See Workings		Opening Retained Earnings	94.00
Investments sold	13.00			Income for the year	65.00
Net Cash flow from investing activities	(78.00)			Closing Retained Earnings	(120.00)
				Dividend Paid	39.00
Stock Repurchased	(39.00)
Dividend Paid	(39.00)	See Workings		Issuance of Bonds
Issuance of Bonds	24.00	See Workings		Opening	171.00
Net Cash flow from financing activities	(54.00)			Closing	195.00
				Issuance of Bonds	24.00
Net Increase/(Decrease) in cash	(9.00)
Beginning Cash Balance	12.00
Ending Cash Balance	3.00