Question

Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year $ $ 13 670 30 410 -Book 255 prences Assets Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 430 $ 305 786 Weaver Company Income Statement For This Year Ended December 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $ 8 (6) During this year, Weaver sold some equipment for $13 that had cost $52 and on which there was ac R echado

Answer 1

Solution

Weaver Company

1. Statement of cash flows:

Weaver Company
Direct Method of Determining the Net Cash flows from Operating Activities:
Sales	$910
Adjustment to cash basis:
Increase in accounts receivable	($260)
		$650
Cost of goods sold	$505
Adjustment to cash basis:
Increase in accounts payable	($125)
Decrease in inventory	($65)	$315
Selling and administration expenses	$247
Adjustment to cash basis:
Increase in prepaid expenses	$2
Decrease in accrued liabilities	$15
Depreciation	($98)	$166
income tax	$48
adjustment to cash basis:
Increase in income tax payable	($7)	$41
Net cash provided by operating by operating activities		$128

2. Statement of cash flows:

Weaver Company
Statement of Cash Flows
For this Year Ended December 31
Operating Activities:
Cash received from customers		$650
Less: cash disbursements for:
cost of goods sold	$315
selling and administrative expenses	$166
income tax	$41
Total cash disbursements		$522
Cash flow from operating activities		$128
Investing Activities:
Sale of equipment	$13
Sale of investments	$56
purchase of equipment	($162)
Cash flow from investing activities		($93)
Financing Activities:
Issue of bonds payable	$60
Repurchase of stock	($82)
Dividends paid	($30)
Cash flow from financing activities		($52)
Net decrease in cash		($17)
Beginning cash and cash equivalents		$30
Ending cash and cash equivalents		$13

Computations:

Equipment purchase –

Beginning balance of plant and equipment (gross)    = $610

Less: cost of equipment sold              ($52)                          

Ending balance                                   (720)                          

Equipment purchased during the year = ($162)        

Depreciation expense -

Accumulated depreciation, beginning balance = $40

Less: accumulated depreciation on equipment sold = ($33)

Less: ending balance =($105)

Depreciation expense = $98

Cash dividends paid:

Beginning balance of retained earnings = $85                      

Add: net income                                 $112

Total                                                    $197               

Less: ending balance                          $167               

Cash dividends paid                            $30