Comparative financial statements for Weaver Company follow:
Weaver Company Comparative Balance Sheet at December 31 |
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This Year | Last Year | ||||
Assets | |||||
Cash | $ | 16 | $ | 22 | |
Accounts receivable | 490 | 320 | |||
Inventory | 165 | 210 | |||
Prepaid expenses | 10 | 8 | |||
Total current assets | 681 | 560 | |||
Property, plant, and equipment | 630 | 520 | |||
Less accumulated depreciation | 120 | 70 | |||
Net property, plant, and equipment | 510 | 450 | |||
Long-term investments | 13 | 42 | |||
Total assets | $ | 1,204 | $ | 1,052 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 340 | $ | 260 | |
Accrued liabilities | 40 | 50 | |||
Income taxes payable | 79 | 72 | |||
Total current liabilities | 459 | 382 | |||
Bonds payable | 295 | 220 | |||
Total liabilities | 754 | 602 | |||
Common stock | 321 | 400 | |||
Retained earnings | 129 | 50 | |||
Total stockholders’ equity | 450 | 450 | |||
Total liabilities and stockholders' equity | $ | 1,204 | $ | 1,052 | |
Weaver Company Income Statement For This Year Ended December 31 |
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Sales | $ | 820 | ||||
Cost of goods sold | 460 | |||||
Gross margin | 360 | |||||
Selling and administrative expenses | 233 | |||||
Net operating income | 127 | |||||
Nonoperating items: | ||||||
Gain on sale of investments | $ | 9 | ||||
Loss on sale of equipment | (6 | ) | 3 | |||
Income before taxes | 130 | |||||
Income taxes | 39 | |||||
Net income | $ | 91 | ||||
During this year, Weaver sold some equipment for $13 that had cost $43 and on which there was accumulated depreciation of $24. In addition, the company sold long-term investments for $38 that had cost $29 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $79 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 remaining balance sheet accounts, prepare a statement of cash flows for this year.
1) | ||
Sales | $ 820.00 | |
Increase in accounts receivable | $ (170.00) | $ 650.00 |
Cost of goods sold | $ 460.00 | |
Adjustments to a cash basis: | ||
Decrease in inventory | $ (45.00) | |
Increase in accounts payable | $ (80.00) | $ 335.00 |
Selling and administrative expenses | $ 233.00 | |
Adjustments to a cash basis: | ||
Increase in prepaid expenses | $ 2.00 | |
Decrease in accrued liabilities | $ 10.00 | |
Depreciation charges | $ (74.00) | $ 171.00 |
Income taxes | $ 39.00 | |
Adjustments to a cash basis: | ||
Increase in deferred income taxes | $ (7.00) | $ 32.00 |
Net cash provided by operating activities | $ 112.00 | |
2) | ||
Weavers Company | ||
Statement of Cash Flows | ||
For the Year Ended December 31 | ||
Operating activities: | ||
Cash received from customers | $ 650.00 | |
Less cash disbursements for: | ||
Cost of merchandise purchased | $ 335.00 | |
Selling and administrative expenses | $ 171.00 | |
Income taxes | $ 32.00 | |
Total cash disbursements | $ 538.00 | |
Net cash provided by operating activities | $ 112.00 | |
Investing activities: | ||
Proceeds from sale of long-term investments | 38 | |
Proceeds from sale of equipment | 13 | |
Additions to plant and equipment | -103 | |
Net cash used for investing activities | -52 | |
Financing activities: | ||
Increase in bonds payable | 75 | |
Decrease in common stock | -79 | |
Cash dividends | -62 | |
Net cash provided by financing activities | -66 | |
Net decrease in cash | $ (6.00) | |
Cash balance, January 1 | $ 22.00 | |
Cash balance, December 31 | $ 16.00 |
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 $ 11 $ 23 Accounts receivable 510 330 Inventory 160 215 Prepaid expenses 5 3 Total current assets 686 571 Property, plant, and equipment 640 530 Less accumulated depreciation 95 80 Net property, plant, and equipment 545 450 Long-term investments 10 43 Total assets $ 1,241 $ 1,064 Liabilities and Stockholders' Equity Accounts payable $ 350 $ 265 Accrued...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ -7 $ 11 Accounts receivable 310 230 Inventory 156 194 Prepaid expenses 9 5 Total current assets 468 440 Property, plant, and equipment 510 431 Less accumulated depreciation (85 ) (70 ) Net property, plant, and equipment 425 361 Long-term investments 28 35 Total assets $ 921 $ 836 Liabilities and Stockholders' Equity Accounts payable $ 304 $...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ -7 $ 11 Accounts receivable 310 230 Inventory 156 194 Prepaid expenses 9 5 Total current assets 468 440 Property, plant, and equipment 510 431 Less accumulated depreciation (85 ) (70 ) Net property, plant, and equipment 425 361 Long-term investments 28 35 Total assets $ 921 $ 836 Liabilities and Stockholders' Equity Accounts payable $ 304 $...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash and cash equivalents $ 13 $ 30 Accounts receivable 670 410 Inventory 190 255 Prepaid expenses 7 5 Total current assets 880 700 Property, plant, and equipment 720 610 Less accumulated depreciation 105 40 Net property, plant, and equipment 615 570 Long-term investments 3 51 Total assets $ 1,498 $ 1,321 Liabilities and Stockholders' Equity Accounts payable $ 430...
omparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ -4 $ 11 Accounts receivable 310 230 Inventory 156 195 Prepaid expenses 9 5 Total current assets 471 441 Property, plant, and equipment 516 437 Less accumulated depreciation (86 ) (72 ) Net property, plant, and equipment 430 365 Long-term investments 25 32 Total assets $ 926 $ 838 Liabilities and Stockholders' Equity Accounts payable $ 304 $...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ 13 $ 29 Accounts receivable 650 400 Inventory 185 250 Prepaid expenses 6 4 Total current assets 854 683 Property, plant, and equipment 710 600 Less accumulated depreciation 100 90 Net property, plant, and equipment 610 510 Long-term investments 6 50 Total assets $ 1,470 $ 1,243 Liabilities and Stockholders' Equity Accounts payable $ 420 $ 300 Accrued...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ 6 $ 11 Accounts receivable 270 210 Inventory 105 155 Prepaid expenses 6 4 Total current assets 387 380 Property, plant, and equipment 520 410 Less accumulated depreciation 95 60 Net property, plant, and equipment 425 350 Long-term investments 26 31 Total assets $ 838 $ 761 Liabilities and Stockholders' Equity Accounts payable $ 230 $ 205 Accrued...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ 7 $ 11 Accounts receivable 309 229 Inventory 158 196 Prepaid expenses 9 5 Total current assets 483 441 Property, plant, and equipment 509 430 Less accumulated depreciation (86 ) (71 ) Net property, plant, and equipment 423 359 Long-term investments 27 33 Total assets $ 933 $ 833 Liabilities and Stockholders' Equity Accounts payable $ 304 $...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash and cash equivalents $ 3 $ 14 Accounts receivable 330 240 Inventory 110 170 Prepaid expenses 9 7 Total current assets 452 431 Property, plant, and equipment 550 440 Less accumulated depreciation 60 50 Net property, plant, and equipment 490 390 Long-term investments 25 34 Total assets $ 967 $ 855 Liabilities and Stockholders' Equity Accounts payable $ 260...
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash and cash equivalents $ 3 $ 14 Accounts receivable 330 240 Inventory 110 170 Prepaid expenses 9 7 Total current assets 452 431 Property, plant, and equipment 550 440 Less accumulated depreciation 60 50 Net property, plant, and equipment 490 390 Long-term investments 25 34 Total assets $ 967 $ 855 Liabilities and Stockholders' Equity Accounts payable $ 260...