Question

Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash	$	16			$	12
Accounts receivable		293				230
Inventory		157				195
Prepaid expenses		8				6
Total current assets		474				443
Property, plant, and equipment		513				434
Less accumulated depreciation		(83	)			(71	)
Net property, plant, and equipment		430				363
Long-term investments		24				31
Total assets	$	928			$	837
Liabilities and Stockholders' Equity
Accounts payable	$	302			$	225
Accrued liabilities		71				79
Income taxes payable		71				64
Total current liabilities		444				368
Bonds payable		198				172
Total liabilities		642				540
Common stock		163				201
Retained earnings		123				96
Total stockholders’ equity		286				297
Total liabilities and stockholders' equity	$	928			$	837

Weaver Company Income Statement For This Year Ended December 31
Sales					$	753
Cost of goods sold						449
Gross margin						304
Selling and administrative expenses						220
Net operating income						84
Nonoperating items:
Gain on sale of investments	$	5
Loss on sale of equipment		(1	)			4
Income before taxes						88
Income taxes						23
Net income					$	65

During this year, Weaver sold some equipment for $19 that had cost $30 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $12 that had cost $7 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $38 of its own stock. This year Weaver did not retire any bonds.

Garrison_16e_Rechecks_2020_01_27

Problem 14-7 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.)

(Previous Info)Statement of Cash Flows (Partial)For the current yearParticularsDetailsAmountCash Flow from Operating Activities:Net Income$65.00Adjustments to reconcile net income to net cash provided by operations:Depreciation Expense ($83 - $71)$12.00Loss on sale of equipment$1.00Gain on sale of investment-$5.00Increase in accounts receivables ($293 - $230)-$63.00Decrease in inventory ($195 - $157)$38.00Increase in prepaid expenses ($8 - $6)-$2.00Increase in accounts payable ($302 - $225)$77.00Decrease in accrued Liabilities ($79 - $71)-$8.00Increase in income taxes payable ($71 - $64)$7.00$57.00Net Cash provided by operating activities$122.00

Answer 1

Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income		$                65
Adjustments
Depreciation	$              22
Gain on sale of investment	$               -5
Loss on sale of equipment	$                1
Increase in Accounts Receivable	$             -63
Decrease in Inventory	$              38
Increase in Prepaid Expenses	$               -2
Increase in Accounts payable	$              77
Decrease in Accrued Liabilities	$               -8
Increase in Income tax payable	$                7
Total Adjustments		$                67
Net Cash from operating activities			$            132
Cash flow from Investing Activities
Sale of Equipment		$                19
Sale of Investment		$                12
Purchase of Equipment		$            -109
Net Cash used in investing activities			$             -78
Cash flow from Financing Activities
Purchase of Treasury Stock		$               -38
Issue of Bonds Payable		$                26
Payment of cash dividends		$               -38
Net Cash from financing activities			$             -50
Net Increase in cash			$                4
Beginning Balance of Cash			$              12
Ending Balance of Cash			$              16