In: Accounting
Problem 12-7A Prepare a Statement of Cash Flows [LO12-1, LO12-2]
[The following information applies to the questions displayed below.]
Comparative financial statements for Weaver Company follow: |
Weaver Company Comparative Balance Sheet December 31, 2015 and 2014 |
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2015 | 2014 | |||
Assets | ||||
Cash | $ | 3 | $ | 12 |
Accounts receivable | 308 | 229 | ||
Inventory | 159 | 196 | ||
Prepaid expenses | 8 | 5 | ||
Total current assets | 478 | 442 | ||
Property, plant, and equipment | 515 | 435 | ||
Less accumulated depreciation | (86) | (72) | ||
Net property, plant, and equipment | 429 | 363 | ||
Long-term investments | 27 | 33 | ||
Total assets | $ | 934 | $ | 838 |
Liabilities and Stockholders' Equity | ||||
Accounts payable | $ | 302 | $ | 225 |
Accrued liabilities | 73 | 80 | ||
Income taxes payable | 72 | 64 | ||
Total current liabilities | 447 | 369 | ||
Bonds payable | 198 | 171 | ||
Total liabilities | 645 | 540 | ||
Common stock | 165 | 201 | ||
Retained earnings | 124 | 97 | ||
Total stockholders’ equity | 289 | 298 | ||
Total liabilities and stockholders' equity | $ | 934 | $ | 838 |
Weaver Company Income Statement For the Year Ended December 31, 2015 |
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Sales | $ | 753 | ||
Cost of goods sold | 450 | |||
Gross margin | 303 | |||
Selling and administrative expenses | 219 | |||
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 |
25 | |||
Net income | $ | 63 | ||
During 2015, 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 $12 that had cost $6 when purchased several years ago. A cash dividend was paid during 2015 and the company repurchased $36 of its own stock. Weaver did not retire any bonds during 2015. |
Part 1
Required: | |||
1. |
Using the indirect method, determine the net cash provided by/used by operating activities for 2015. (Negative amount should be entered with a minus sign.) Part 2
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1.
Weaver Company | ||
Partial Statement of Cash Flows (Indirect Method) | ||
For the Year Ended December 31, 2015 | ||
Cash Flows from Operating Activities: | ||
Net income | 63 | |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation expense [86 - (72 - 10)] | 24 | |
Gain on sale of investments | -6 | |
Loss on sale of equipment | 2 | |
Increase in Accounts receivable | -79 | |
Decrease in Inventory | 37 | |
Increase in Prepaid expenses | -3 | |
Increase in Accounts payable | 77 | |
Decrease in Accrued liabilities | -7 | |
Increase in Income taxes payable | 8 | 53 |
Net cash provided by operating activities | 116 |
2.
Weaver Company | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 2015 | ||
Cash Flows from Operating Activities: | ||
Net cash provided by operating activities | 116 | |
Cash Flows from Investing Activities: | ||
Sale proceeds from equipment | 19 | |
Sale of long-term investment | 12 | |
Purchase of equipment [515 - (435 - 31)] | -111 | |
Net cash used by investing activities | -80 | |
Cash Flows from Financing Activities | ||
Issuance of bonds payable | 27 | |
Repurchase of common stock (165 - 201) | -36 | |
Payment of cash dividends (97 + 63 - 124) | -36 | |
Net cash used by financing activities | -45 | |
Net increase (decrease) in cash | -9 | |
Cash balance, December 31, 2014 | 12 | |
Cash balance, December 31, 2015 | 3 |