Comparative financial statements for Weaver Company follow: During this year, We

Question

Comparative financial statements for Weaver Company follow:

During this year, Weaver sold some equipment for $18 that had cost $30 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $13 that had cost $7 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $42 of its own stock. This year Weaver did not retire any bonds.

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
Comparative Balance Sheet
at December 31 This Year Last Year Assets Cash $ 1 $ 12 Accounts receivable 309 230 Inventory 155 194 Prepaid expenses 9 6 Total current assets 474 442 Property, plant, and equipment 509 429 Less accumulated depreciation (86 ) (71 ) Net property, plant, and equipment 423 358 Long-term investments 23 30 Total assets $ 920 $ 830 Liabilities and Stockholders' Equity Accounts payable $ 304 $ 224 Accrued liabilities 72 79 Income taxes payable 75 63 Total current liabilities 451 366 Bonds payable 195 170 Total liabilities 646 536 Common stock 160 202 Retained earnings 114 92 Total stockholders’ equity 274 294 Total liabilities and stockholders' equity $ 920 $ 830

Explanation / Answer

Cash flow statement: Cash flows from Operating activities: Net income for the year 64 Adjustment required for reconciliation gain on sale of Investment -6 Loss on sale of equipment 2 Depreciation (71-10-86) 25 Increase in accounts receivable -79 Decrease in Inventory 39 Increase in Prepaid expense -3 Increase in Acccounts payable 80 Decrease in Accrues liability -7 Increase in Income Tax liability 12 Net cash provided from Operating activities 127 Cash flows from Investing activities: Sale of Equipment 18 Sale of Investment 13 Purchase of equipment -110 Net cash used in investing activities -79 Cash flows from Financing activities: Issue of Bonds 25 Treasury stock purchases -42 Dividend paid (92+64-114) -42 Net cash ised in financing activities -59 Net decrease in cash -11 Beginning balance in cash 12 Ending balance of cash 1

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