Question

Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash	$	1			$	12
Accounts receivable		309				230
Inventory		155				194
Prepaid expenses		9				6
Total current assets		474				442
Property, plant, and equipment		509				429
Less accumulated depreciation		(86	)			(71	)
Net property, plant, and equipment		423				358
Long-term investments		23				30
Total assets	$	920			$	830
Liabilities and Stockholders' Equity
Accounts payable	$	304			$	224
Accrued liabilities		72				79
Income taxes payable		75				63
Total current liabilities		451				366
Bonds payable		195				170
Total liabilities		646				536
Common stock		160				202
Retained earnings		114				92
Total stockholders’ equity		274				294
Total liabilities and stockholders' equity	$	920			$	830

Weaver Company Income Statement For This Year Ended December 31
Sales					$	752
Cost of goods sold						447
Gross margin						305
Selling and administrative expenses						221
Net operating income						84
Nonoperating items:
Gain on sale of investments	$	6
Loss on sale of equipment		(2	)			4
Income before taxes						88
Income taxes						24
Net income					$	64

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 $7 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $42 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

Cash flow statement:
Cash flows from Operating activities:
Net income for the year				64
Adjustment required for reconciliation
gain on sale of Investment				-6
Loss on sale of equipment				2
Depreciation (71-10-86)				25
Increase in accounts receivable				-79
Decrease in Inventory				39
Increase in Prepaid expense				-3
Increase in Acccounts payable				80
Decrease in Accrues liability				-7
Increase in Income Tax liability				12
Net cash provided from Operating activities					127
Cash flows from Investing activities:
Sale of Equipment				18
Sale of Investment				13
Purchase of equipment				-110
Net cash used in investing activities					-79
Cash flows from Financing activities:
Issue of Bonds				25
Treasury stock purchases				-42
Dividend paid (92+64-114)				-42
Net cash ised in financing activities					-59
Net decrease in cash					-11
Beginning balance in cash					12
Ending balance of cash					1