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 $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 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 $ 9 $ 15 Accounts receivable 340 240 Inventory 125 175 Prepaid expenses 10 6 Total current assets 484 436 Property, plant, and equipment 610 470 Less accumulated depreciation 93 85 Net property, plant, and equipment 517 385 Long-term investments 16 19 Total assets $ 1,017 $ 840 Liabilities and Stockholders' Equity Accounts payable $ 310 $ 230 Accrued liabilities 60 72 Income taxes payable 40 34 Total current liabilities 410 336 Bonds payable 290 180 Total liabilities 700 516 Common stock 210 250 Retained earnings 107 74 Total stockholders’ equity 317 324 Total liabilities and stockholders' equity $ 1,017 $ 840

Explanation / Answer

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.

Working note :

1. Using the indirect method, determine the net cash provided by/used in operating activities for this year.

Cash flow from operating activities 104 Cash flow from investing activities Sale of equipment 20 Sale of long term investment 10 Purchase of equipment (180) Net cash flow from investing activities (150) Cash flow from financing activities repurchased stock (40) Issue common stock 110 Dividend paid (30) Net cash flow from financing activities 40 Net cash flow (6) Beginning cash 15 Ending cash 9

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