[The following information applies to the questions displayed below.] During 201
ID: 2531487 • Letter: #
Question
[The following information applies to the questions displayed below.]
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 $12 that had cost $7 when purchased several years ago. A cash dividend was paid during 2015 and the company repurchased $41 of its own stock. Weaver did not retire any bonds during 2015.
1.
value:
10.00 points
Required information
Using the indirect method, determine the net cash provided by/used by operating activities for 2015. (Negative amount should be entered with a minus sign.)
References
eBook & Resources
WorksheetLearning Objective: 12-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 12-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
2.
value:
10.00 points
Required information
Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for 2015. (List any deduction in cash and cash outflows as negative amounts.)
Comparative financial statements for Weaver Company follow:Explanation / Answer
Solution:
Part 1 --- Net cash provided by/used by operating activities for 2015
Cash Flow from Operating Activities:
$$
$$
Net Income
$66
Adjustments to reconcile net income to net cash flow from operating activities:
+
Depreciation Expenses (Non cash item) (Refer Note 1)
$25
+
Loss on Sale of Equipment
$2
-
Gain on Sale of Investments
-$5
Changes in current operating assets and liabilities:
-
Increase in Accounts Receivable (308 - 229)
-$79
+
Decrease in Inventories (195-155)
$40
-
Increase in Prepaid Expenses (8-5)
-$3
+
Increase in Accounts Payable (301-224)
$77
-
Decrease in Accrued Liabilities (78 - 71)
-$7
-
Income Tax Expenses Paid (Refer Note 2)
-$15
Net Cash provided by Operative Activities
$101
Note 1 --- Depreciation Expenses
WE need to prepare the T-Accounts of Accumulated Depreciation and Property Plant and Equipment
Property, plant, and equipment
Debit
Credit
Beg. Bal
431
Cost of Plant Sold
30
Purchased New (bal fig)
108
Ending Bal
509
539
539
Accumulated Depreciation
Debit
Credit
Depreciation related to Plant Sold
10
Beg. Bal
71
Ending Bal
86
Depreciation Expense for the Year (bal Fig)
25
96
96
Note 2 ---
Income Tax
Debit
Credit
Cash (Tax Paid) (bal fig)
15
Beg. Bal
65
Ending Bal
75
Income Tax Expense for the year
(refer income statement)
25
90
90
Part 2 --- Cash Flow Statement
Cash Flow Statement (Indirect Method)
Cash Flow from Operating Activities:
$$
$$
Net Income
$66
Adjustments to reconcile net income to net cash flow from operating activities:
+
Depreciation Expenses (Non cash item) (Refer Note 1)
$25
+
Loss on Sale of Equipment
$2
-
Gain on Sale of Investments
-$5
Changes in current operating assets and liabilities:
-
Increase in Accounts Receivable (308 - 229)
-$79
+
Decrease in Inventories (195-155)
$40
-
Increase in Prepaid Expenses (8-5)
-$3
+
Increase in Accounts Payable (301-224)
$77
-
Decrease in Accrued Liabilities (78 - 71)
-$7
-
Income Tax Expenses Paid (Refer Note 2)
-$15
Net Cash generated from Operative Activities
$101
Cash Flow from Investing Activities:
-
Purchase of Equipment(Refer Note 1)
-$108
+
Sale of Equipment
$18
+
Sale of Investment
$12
Net Cash used by Investing Activities
-$78
Cash Flow from Financing Activities:
-
Purchases Treasury stock (202-161)
-$41
+
Proceeds from Issuance of bond (197-170)
$27
-
Dividend Paid (93+66-118)
-$41
Net Cash generated from Financing Activities
-$55
Net Increase/(Decrease) in Cash and Cash Equivalents
-$32
Cash and Cash Equivalents at the beginning of the year
$12
Cash and Cash Equivalents at the end of the year
-$20
Note --- Answer is not coming correct… pls check question whether any information is missing.
$25 difference….pls check where any transaction of $25 is missing..
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Cash Flow from Operating Activities:
$$
$$
Net Income
$66
Adjustments to reconcile net income to net cash flow from operating activities:
+
Depreciation Expenses (Non cash item) (Refer Note 1)
$25
+
Loss on Sale of Equipment
$2
-
Gain on Sale of Investments
-$5
Changes in current operating assets and liabilities:
-
Increase in Accounts Receivable (308 - 229)
-$79
+
Decrease in Inventories (195-155)
$40
-
Increase in Prepaid Expenses (8-5)
-$3
+
Increase in Accounts Payable (301-224)
$77
-
Decrease in Accrued Liabilities (78 - 71)
-$7
-
Income Tax Expenses Paid (Refer Note 2)
-$15
Net Cash provided by Operative Activities
$101
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