P17-7A Presented below are the financial statements of Weller Company. WELLER CO
ID: 2349671 • Letter: P
Question
P17-7A
Presented below are the financial statements of Weller Company.
WELLER COMPANY
Comparative Balance Sheets
December 31
Assets
2012
2011
Cash $ 35,000 $ 20,000
Accounts receivable 33,000 14,000
Merchandise inventory 27,000 20,000
Property, Plant and Equipment 60,000 78,000
Accumulated depreciation
(29,000)
(24,000)
Total
$126,000
$108,000
Liabilities and Stockholders' Equity
Accounts payable $ 29,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings
45,000
38,000
Total
$126,000
$108,000
WELLER COMPANY
Income Statement
For the Year Ended December 31, 2012
Sales $242,000
Cost of goods sold
175,000
Gross profit 67,000
Operating expenses
24,000
Income from operations 43,000
Interest expense
3,000
Income before income taxes 40,000
Income tax expense
8,000
Net income
$ 32,000
Additional data:
Dividends declared and paid were $25,000.
During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
All depreciation expense, $14,500, is in the selling expense category.
All sales and purchases are on account.
Prepare a statement of cash flows using the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest e.g. 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
WELLER COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
$
Adjustments to reconcile net income to net
cash provided by operating activities
$
Net cash by operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash by financing activities
Net in cash
Cash at beginning of period
Cash at end of period
$
Compute free cash flow.
$
Explanation / Answer
You just need to go line by line with each asset/liability item. For example, a/r went up by $21k so that was a $21k use of cash. This is because when the company sold their product they extended credit to their customers instead of collecting cash. Inventory went down by $14k so that was a source of cash. Instead of stuff sitting around in their warehouse it was sold and is therefore a source of cash. This stuff is hard, I feel for ya. Best of luck, hope I helped a little!
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.