Comparative financial statements for Weaver Company follow: Weaver Company Compa

Question

Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet December 31, 2015 and 2014 2015 2014 Assets Cash $ 11 $ 12 Accounts receivable 309 230 Inventory 158 195 Prepaid expenses 9 5 Total current assets 487 442 Property, plant, and equipment 507 429 Less accumulated depreciation (85) (71) Net property, plant, and equipment 422 358 Long-term investments 25 31 Total assets $ 934 $ 831 Liabilities and Stockholders' Equity Accounts payable $ 304 $ 224 Accrued liabilities 72 78 Income taxes payable 71 63 Total current liabilities 447 365 Bonds payable 200 172 Total liabilities 647 537 Common stock 161 200 Retained earnings 126 94 Total stockholders’ equity 287 294 Total liabilities and stockholders' equity $ 934 $ 831 Weaver Company Income Statement For the Year Ended December 31, 2015 Sales $ 755 Cost of goods sold 448 Gross margin 307 Selling and administrative expenses 219 Net operating income 88 Nonoperating items: Gain on sale of investments $ 7 Loss on sale of equipment (2) 5 Income before taxes 93 Income taxes 22 Net income $ 71 During 2015, 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 $6 when purchased several years ago. A cash dividend was paid during 2015 and the company repurchased $39 of its own stock. Weaver did not retire any bonds during 2015.

Explanation / Answer

Balance Sheet 2015 2014 Increase/Decrease Assets Cash 11 12 -1 Account receivable 309 230 79 Inventory 158 195 -37 Prepaid expenses 9 5 4 Total Current Assets 487 442 45 Property Plant & equipment 507 429 78 Accumulated depriciation -85 -71 -14 Net Property Plant & equipment 422 358 64 Long term investments 25 31 -6 Total Assets 934 831 103 Liabilities & equity stakeholders equity accounts payable 304 224 80 Accrued liabilities 72 78 -6 Income taxes payable 71 63 8 Total current liabilities 447 365 82 Bonds payable 200 172 28 Total liabilities 647 537 110 Common stock 161 200 -39 Retained earnings 126 94 32 Total stockholders equity 287 294 -7 Total liabilities and stockholders 934 831 103 Income Statement Sales 755 Less Cost of goods sold 448 Gross Margin 307 Less Selling & admin expenses 219 Net operating income 88 Gain on sale of investments 7 Loss on sale of equipment -2 Income before taxes 93 Income taxes 22 Net Income 71 Cash flow from operating activities Net Income 93 Add Loss on sale of equipment 2 Depriciation 24 Decrease in inventory 37 Increase in equity accounts payable 80 143 Less Gain on sale of investment 7 Increase in accounts receivable 79 Increase in prepaid expenses 4 Decrease in accrued liabilities 6 Income tax paid 14 110 Net cash flow from operating activities 126 Cash flow from investing activities Sale of equipment 18 Sale of long term investments 13 Purchase of equipment -108 Increase in bonds payable 28 Net Cash flow from investing activities -49 Cash flow from financing activity Cash dividend paid -39 repurchase of treasury stock -39 Net Cash flow from financing activity -78 Cash flow -1 Cash opening 12 Cash closing 11 Net change -1

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