Presented below are the financial statements of Weller Company. WELLER COMPANY C

Question

Presented below are the financial statements of Weller Company.

WELLER COMPANY
Comparative Balance Sheets
December 31

Assets 2008
2007

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, 2008

Sales $242,000
Cost of goods sold 175,000

Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000
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 eg 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
WELLER COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2008

Cash flows from operating activities
Sale of equipmentIssuance of common stockIncrease in accounts payableDecrease in income taxes payablePayment of dividendsNet incomeRedemption of bondsDepreciation expenseIncrease in accounts receivableIncrease in merchandise inventory $
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation expensePayment of dividendsRedemption of bondsNet incomeIncrease in accounts receivableIncrease in merchandise inventorySale of equipmentIncrease in accounts payableDecrease in income taxes payableIssuance of common stock $
Net incomeIncrease in merchandise inventoryDecrease in income taxes payableRedemption of bondsSale of equipmentIssuance of common stockPayment of dividendsIncrease in accounts payableDepreciation expenseIncrease in accounts receivable
Redemption of bondsIncrease in accounts receivableIncrease in merchandise inventorySale of equipmentNet incomeDepreciation expenseIncrease in accounts payableDecrease in income taxes payableIssuance of common stockPayment of dividends
Issuance of common stockPayment of dividendsSale of equipmentRedemption of bondsIncrease in merchandise inventoryNet incomeDepreciation expenseIncrease in accounts payableIncrease in accounts receivableDecrease in income taxes payable
Decrease in income taxes payableNet incomeSale of equipmentIssuance of common stockRedemption of bondsPayment of dividendsIncrease in accounts payableDepreciation expenseIncrease in accounts receivableIncrease in merchandise inventory


Net cash provided by operating activities

Cash flows from investing activities
Increase in accounts payableNet incomeSale of equipmentPayment of dividendsRedemption of bondsDecrease in income taxes payableDepreciation expenseIncrease in merchandise inventoryIssuance of common stockIncrease in accounts receivable

Cash flows from financing activities
Increase in accounts payableRedemption of bondsIssuance of common stockIncrease in accounts receivablePayment of dividendsSale of equipmentIncrease in merchandise inventoryNet incomeDecrease in income taxes payableDepreciation expense
Increase in merchandise inventoryNet incomeIssuance of common stockSale of equipmentRedemption of bondsDecrease in income taxes payablePayment of dividendsDepreciation expenseIncrease in accounts receivableIncrease in accounts payable
Depreciation expenseIncrease in accounts receivableSale of equipmentDecrease in income taxes payableIncrease in merchandise inventoryIncrease in accounts payableIssuance of common stockNet incomePayment of dividendsRedemption of bonds

Net cash used by financing activities


Net decreaseincrease in cash
Cash at beginning of period

Cash at end of period $








Compute free cash flow.
$






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Explanation / Answer

WELLER COMPANY

Statement of cash flows

For the year ended December 31, 2008

WELLER COMPANY

Statement of cash flows

For the year ended December 31, 2008

Particulars $ $ Adjustments to reconcile net income to net cash provided by operating activities Net income 32,000 Operating activities: Loss on sale of equipment 8,500 Depriciation 14,500 Increase in Accounts payable 14,000 Increase in Accounts receivables -19,000 increase in Inventory -7,000 Income tax payable -1,000 Cash flows from operating activities 10,000 Investing activitties: no activities Financing activities: Common stock issued 4,000 Dividends paid -25,000 Redemption of bonds -6,000 Cash used in financing activities -27,000 Increase in cash 15,000 Cash at the beginning period 20,000 Cash at ending period 35,000

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