Comparative financial statements for Weaver Company follow: During this year, We
ID: 2520320 • Letter: C
Question
Comparative financial statements for Weaver Company follow:
During this year, Weaver sold some equipment for $18 that had cost $31 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 bonds.
Required:
1. Using the indirect method, determine the net cash provided by/used in operating activities for this year. (List any deduction in cash and cash outflows as negative amounts.)
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Comparative financial statements for Weaver Company follow:
During this year, Weaver sold some equipment for $18 that had cost $31 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 bonds.
Weaver CompanyComparative Balance Sheet
at December 31 This Year Last Year Assets Cash $ 5 $ 12 Accounts receivable 309 230 Inventory 156 196 Prepaid expenses 8 6 Total current assets 478 444 Property, plant, and equipment 510 430 Less accumulated depreciation (85 ) (72 ) Net property, plant, and equipment 425 358 Long-term investments 28 35 Total assets $ 931 $ 837 Liabilities and Stockholders' Equity Accounts payable $ 302 $ 226 Accrued liabilities 72 79 Income taxes payable 74 64 Total current liabilities 448 369 Bonds payable 200 172 Total liabilities 648 541 Common stock 163 200 Retained earnings 120 96 Total stockholders’ equity 283 296 Total liabilities and stockholders' equity $ 931 $ 837
Explanation / Answer
Weaver Company Statement of Cash Flows—Indirect Method (partial) (Amts in $) Net Income 61 Adjustments to reconcile net income to operating cash flows: Add: Depreciation Expense ($85 Acc. Dep. Closing Bal.+$10 Acc. Dep. on sale-$72 Acc Dep. Beg. Bal) 23 Less: Gain on sale of investments (6) Add: Loss on sale of equipment 3 Less: Increase in Accounts Receivable ($309-$230) (79) Add: Decrease in Inventory ($196-$156) 40 Less: Increase in Prepaid Expense ($8-$6) (2) Add: Increase in Accounts Payable ($302-$226) 76 Less: Decrease in Accrued Liabilities ($79-$72) (7) Add: Increase in Income taxes payable ($74-$64) 10 Total Adjustments 58 Net Cash provided by Operating Activities ($61+$58) 119 Weaver Company Statement of Cash Flows For This Year Ended December 31 (Amts in $) Operating activities: Net Cash Provided by Operating Activities (A) 119 Investing activities: Sale of Equipment 18 Sale of long term investment 13 Purchase of Equipment ($510 Closing Bal+$31 Cost of equipment sold-$430 Beg. Bal) (111) Net Cash used in Investing Activities (B) (80) Financing activities: Issue of Bonds ($200-$172) 28 Repurchase of own stock ($200-$163) (37) Cash Dividend paid ($96 Retained Earning Beg. Bal+$61 Net Income-$120 Retained Earning Clo Bal.) (37) Net Cash used in Financing Activities (C) (46) Net Increase/(decrease) in cash and cash Equivalents (D = A+B+C) (7) Beginning cash and cash equivalents (E) 12 Ending cash and cash equivalents (D+E) 5
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