Question

Requlred Information The following information applies to the questions displayed below] Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash 13 229 6 Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments 388 157 9 196 6 488 444 509 430 (85) 424 (71) 359 32 $835 26 Total assets $ 930 Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable $384 $225 78 71 72 64 367 447 199 172 Total liabilities 646 539 Common stock 281 163 Retained earnings Total stockholders' equity 95 121 296 284 930 Total liabilities and stockholders' equity $835 Weaver Company Income Statement For This Year Ended December 31 Sales $752 447 305 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments 222 83 6 (2) Loss on sale of equipment Income before taxes 87 Income taxes 23 $ 64 Net income 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 $12 that had cost $6 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. Required: 1. Using the indirect method, determine the net cash provided by/used in operating activities for this year. Weaver Company Statement of Cash Flows-Indirect Method (partial) 0 S 0 H*

Answer 1

SOLUTION : 1
STATEMENT OF CASH FLOW (PARTIAL)
	Amount in $	Amount in $
Net income		$                      64
Cash flows from operating activities
Adjustments to reconcile net income to Operating Cash Flow
Depreciation Expenses ($85 - ($71 - $ 10))	$                      24
Gain on the sale of investment	$                      -6
Loss on sale of Equipment	$                        2
(Increase) / Decrease in Account receivables	$                    -79
Inventory Decrease / (Increase)	$                      39
Increase in Prepaid Expenses	$                      -3
Accounts payable Increase / ( Decrese)	$                      79
Increase in Accrued Expenses Payable	$                      -7
Increase in income tax payable	$                        8
		$                      57
Net cash from operating activities		$                   121
SOLUTION : 2
STATEMENT OF CASH FLOW
	Amount in $	Amount in $
Operating activitties		$                   121
Cash flows from investing activities
Purchase of Property, Plant & Equipment ( $ 430 - $ 30 - $ 509)	$                  -109
Sales of Investment	$                      12
Sale of Equipment	$                      18
Net cash used in investing activities		$                    -79
Cash flows from Financing activities
Purhcase of Treasury stock	$                    -38
Dividend Paid	$                    -38
Issue of Bonds	$                      27
Net cash used in financing activities		$                    -49
Net increase in cash and cash equivalents		$                      -7
Add :Cash and cash equivalents at beginning of period		$                      13
Cash and cash equivalents at end of period		$                        6