This question is from chapter 14 of Managerial Accounting 16 th edition by Ray G
ID: 2432938 • Letter: T
Question
This question is from chapter 14 of Managerial Accounting 16th edition by Ray Garrison.
Problem 14-7 Prepare a Statement of Cash Flows [L014-1, LO14-2] [The following information applies to the questions displayed below.J Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Last Year Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment $ 12 228 195 309 158 9 481 513 86 427 26 $ 934 440 435 71 364 Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets $837 Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity 304 72 74 450 197 647 164 123 287 $225 79 64 368 172 540 201 96 297 $837 Total liabilities and stockholders equity $ 934 Weaver Company Income Statement For This Year Ended December 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: $ 750 448 302 219 83 Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes 24 Net income $ 64 During this year, Weaver sold some equipment for $19 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 $37 of its own stock. This year Weaver did not retire any bondsExplanation / Answer
Weaver Company
Cash flow from Operating Activities
For this Year ended December 31
Cash Flow from Operating Activities:
Net Income
$ 64.00
Add: Adjustments
Depreciation Expense
$ 25.00
Gain on sale of Investment
$ (6.00)
Loss on sale of Equipment`
$ 1.00
Increase in Accounts receivables
$ (81.00)
Decrease in Inventory
$ 37.00
Increase in Accounts payable
$ 79.00
Decrease in Accrued liabilities
$ (7.00)
Increase in Income taxes payable
$ 10.00
Increase in Prepaid Expenses
$ (4.00)
$ 54.00
Cash Outflow from Operating Activities
$ 118.00
Weaver Company
Cash flow Statement
For this Year ended December 31
Cash Flow from Operating Activities:
Net Income
$ 64.00
Add: Adjustments
Depreciation Expense
$ 25.00
Gain on sale of Investment
$ (6.00)
Loss on sale of Equipment`
$ 1.00
Increase in Accounts receivables
$ (81.00)
Decrease in Inventory
$ 37.00
Increase in Accounts payable
$ 79.00
Decrease in Accrued liabilities
$ (7.00)
Increase in Income taxes payable
$ 10.00
Increase in Prepaid Expenses
$ (4.00)
$ 54.00
A. Cash Outflow from Operating Activities
$ 118.00
Cash flows from Investing activities
Sale of Equipment
$ 19.00
sale of Investment
$ 13.00
Purchase of Equipment
$(108.00)
B.Net cash used by investing activities
$ (76.00)
Cash flows from Financing activities
Purchase of Own Shares
$ (37.00)
Payment of Dividend
$ (37.00)
Proceeds from Bonds Issue
$ 25.00
C. Net cash Used in financing activities
$ (49.00)
(A+B+C) Net increase (Decrease) in cash and Cash Equivalent
$ (7.00)
Add: Beginning cash Balance
$ 12.00
Ending Cash Balance
$ 5.00
Working notes
Depreciation expense for the year
Opening Accumulated depreciation balance
$ 71.00
Less: Depreciation on equipment sold
$ 10.00
$ 61.00
Less: Closing Accumulated depreciation balance
$ 86.00
Depreciation expense for the period
$ 25.00
Purchase of Equipment
Gross opening balance of equipment
$ 435.00
Less: Equipment sold(cost)
$ 30.00
Less: Closing balance of equipment
$ 513.00
Equipment Purchased
$ 108.00
Dividend amount paid during year
Opening balance of retained earnings
$ 96.00
Add: Profit during year
$ 64.00
Less: Closing balance of Retained earnings
$ 123.00
Dividends paid
$ 37.00
Weaver Company
Cash flow from Operating Activities
For this Year ended December 31
Cash Flow from Operating Activities:
Net Income
$ 64.00
Add: Adjustments
Depreciation Expense
$ 25.00
Gain on sale of Investment
$ (6.00)
Loss on sale of Equipment`
$ 1.00
Increase in Accounts receivables
$ (81.00)
Decrease in Inventory
$ 37.00
Increase in Accounts payable
$ 79.00
Decrease in Accrued liabilities
$ (7.00)
Increase in Income taxes payable
$ 10.00
Increase in Prepaid Expenses
$ (4.00)
$ 54.00
Cash Outflow from Operating Activities
$ 118.00
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