Question

Comparative financlal statements for Weaver Company follow Weaver Company Comparative Balance Sheet at December 31 Last Year This Year Assets 4 Cash 18 Accounts receivable 250 200 Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation 18e 158 5 3 359 363 510 480 98 58 350 Net property, plant, and equipment Long-term investments 428 26 30 S 743 $885 Total assets Liabilities and Stockholders Equity Accounts payable $ 220 280 Accrued liabilities 35 50 Income taxes payable 72 60 Total current 1iabilities 327 310 Bonds payable 145 108 Total liabilities 472 410 Connon stock Retained earnings Total stockholders' equity 265 300 68 33 333 333 Total liabilities and stockholders equity 885 $ 743 Weaver Company Incone Statenent For This Year Ended December 31 Sales $780 ARe Cost of goods sold Gross nargin Selling and administrative expenses Net operating income Nonoperating itens: Gain on sale of investments 300 231 69 $10 Loss on sale of equipment (9) 1 78 Income before taxes Income taxes 21. Net income 49 During this year, Weaver sold some equlpment for $10 that had cost $31 and on which there was accumulated depreclation of $12. In addition, the company sold long-term Investments for $14 that had cost $4 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $35 of Its own stock. This year Weaver did not retire any bonds. Required: 1. Using the direct method, adjust the company's Income statement for this year to a cash basis. 2 Using the Information obtained in (1) above, along with an analysis of the remalning balance sheet accounts, prepare a statement of cash flows for this year Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Weaver Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis 0 Adjustments to a cash basis: 0 Seling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis 0 Required 2 Required 1

Answer 1

Hi

Let me know in case you face any issue:

Solution: Amount ($)| 1) Note: Ignore the blank unused lines: Particulars Sales Adjustment to a cash basis: Less: Increase in Accounts Receivable 2) Note: Ignore the blank unused rows. Cash flow Statement - Direct Method $ 700 $ -50 Amount ($) $ 650 $ 400 $ 650 Cost of goods sold Adjustment to a cash basis: Less: Increase in Accounts payable Less: Decrease in Inventory $ 330 $ Particulars Cash flow from Operating Activities: Cash received from customers Less: Cash disbursement for: Cost of Merchandise purchased Selling and admin. Expenses Income taxes Total Cash Disbursements Net Cash provided by Operating Activities (A) Investing Activities: Proceed from Sale of Equipment Proceed from Sale of Long term investments Addition to plant and Equipment (510) - (400-31) Net Cash used for Investing Activities (B) $ Selling and admin. Expenses Adjustment to a cash basis: Les: Depreciation (90) - (50-12) Add: Increase in Prepaid expenses Add: Decrease in Accrued liabilities 115 $ 52 $ 196 $ 21 $ -117 Income tax Expense Adjustment to a cash basis: Less: Increase in Income tax Payable -12 $ $ 9 115 Net Cash flow from Operating activities $ Cash Flow from Financing Activities: Repurchase Common stock Issuance of Bonds Payable Cash Dividend paid (68)-(33+49) Net Cash used for Financing Activities -C) Net Decrease in Cash (A+B+C) Beginning Cash and cash equivalents Ending Cash and cash equivalents