Question

In: Accounting

Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This...

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.)

Solutions

Expert Solution

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

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