Question

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash	$	9			$	12
Accounts receivable		307				231
Inventory		156				195
Prepaid expenses		9				5
Total current assets		481				443
Property, plant, and equipment		508				429
Less accumulated depreciation		(85	)			(70	)
Net property, plant, and equipment		423				359
Long-term investments		28				34
Total assets	$	932			$	836
Liabilities and Stockholders' Equity
Accounts payable	$	303			$	226
Accrued liabilities		71				78
Income taxes payable		74				65
Total current liabilities		448				369
Bonds payable		196				171
Total liabilities		644				540
Common stock		163				200
Retained earnings		125				96
Total stockholders’ equity		288				296
Total liabilities and stockholders' equity	$	932			$	836

Weaver Company Income Statement For This Year Ended December 31
Sales					$	753
Cost of goods sold						448
Gross margin						305
Selling and administrative expenses						220
Net operating income						85
Nonoperating items:
Gain on sale of investments	$	7
Loss on sale of equipment		(2	)			5
Income before taxes						90
Income taxes						24
Net income					$	66

During this year, 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 $13 that had cost $6 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $37 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. (List any deduction in cash and cash outflows as negative amounts.)

2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.

	Weaver Company Statement of Cash Flows For This Year Ended December 31 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $0

Answer 1

66 Weaver Company Statement of Cash flows - Indirect Method (Partial) Cash flows from Operating Activities: Net Income Adjustments to reconcile net income to net cash Basis Depreciation expenses Gain on Sale of investments loss on sale of equipment Increase in accounts receivables Decrease in Inventory Increase in Prepaid Expenses Increases in Accounts Payable Decreases in accured Liabilities Increases in Income Taxes payable Net Cash provided by operating activities 9 S $ 58 124

124 19 (110) Weaver Company Statement of Cash flows For This Year Ended December 31 Operating Activities: Net Cash provided by operating activities Investing Activities Sale of Equipment Sale of investments Purchase of property, plant and equipment Net Cash Used by Investing activities Financing Activities Issuannce of Bonds payable Cash Dividends paid Purchase of Common stock Net Cash provided by Financing activities Net decrease in cash Beginning Cash and Cash equivalents Ending Cash and Cash equivalents S (78) S 25 (37) (37) (49)

Notes: Purchase of plant and Equipment Closing Balance of plant and Equipment Less: net of opening balance of Plant and Equipment($429-$31) Purchase of plant and Equipment S $ S 508 398 110 Dividends paid Opening balance of Retained Earnings Add: Net Income $ 96 66 162 125 Less: Closing Balance of Retained earnings Dividends Paid S S 37