Question

Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash and cash equivalents	$	16			$	11
Accounts receivable		291				228
Inventory		157				196
Prepaid expenses		9				6
Total current assets		473				441
Property, plant, and equipment		504				426
Less accumulated depreciation		(81	)			(71	)
Net property, plant, and equipment		423				355
Long-term investments		29				35
Total assets	$	925			$	831
Liabilities and Stockholders' Equity
Accounts payable	$	304			$	225
Accrued liabilities		71				79
Income taxes payable		74				63
Total current liabilities		449				367
Bonds payable		198				170
Total liabilities		647				537
Common stock		160				200
Retained earnings		118				94
Total stockholders’ equity		278				294
Total liabilities and stockholders' equity	$	925			$	831

Weaver Company Income Statement For This Year Ended December 31
Sales					$	751
Cost of goods sold						447
Gross margin						304
Selling and administrative expenses						222
Net operating income						82
Nonoperating items:
Gain on sale of investments	$	7
Loss on sale of equipment		(2	)			5
Income before taxes						87
Income taxes						23
Net income					$	64

During this year, Weaver sold some equipment for $19 that had cost $31 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 $40 of its own stock. This year Weaver did not retire any bonds.

Brewer_8e_Rechecks_2020_01_27

Problem 13-7 Part 2

2. Using the information from Part 1, 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

Answer-

WEAVER COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31
Particulars		Amount
		$
Cash flow from operating activities
Net Income		64
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		20
Gain on sale of investment		-7
Loss on sale of equipment		2
Change in operating assets & liabilities
Increase in Accounts receivable		-63
Decrease in inventory		39
Increase in prepaid expenses		-3
Increase in accounts payable		79
Decrease in accrued liabilities		-8
Increase in income taxes payable		11
Net cash flow from operating activities (a)		134
Cash Flow from Investing activities
Long term investments sold		13
Equipment purchased		-109
Old equipment sold		19
Net cash Flow from Investing activities (b)		-77
Cash Flow from Financing activities
Cash dividends paid	($94+$64-$118)	-40
Stock repurchased		-40
Bonds issued		28
Net cash Flow from Financing activities (c)		-52
Net Change in cash c=a+b+c		5
Beginning cash balance		11
Closing cash balance		16