During 2014, Weaver sold some equipment for $19 that had cost $31 and on which t

Question

     During 2014, Weaver sold some equipment for $19 that had cost $31 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 2014 and the company repurchased $37 of its own stock. Weaver did not retire any bonds during 2014.

Using the indirect method, determine the net cash for operating activities for 2014. (Negative amount should be entered with a minus sign.)

Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for 2014. (List any deduction in cash and cash outflows as negative amounts.)

Weaver Company
Comparative Balance Sheet
December 31, 2014 and 2013 2014 2013   Assets   Cash $ 6     $ 12       Accounts receivable 306     229       Inventory 156     194       Prepaid expenses 8     5       Total current assets 476     440       Property, plant, and equipment 513     434           Less accumulated depreciation (85)    (71)      Net property, plant, and equipment 428     363       Long-term investments 26     33       Total assets $ 930     $ 836       Liabilities and Stockholders' Equity   Accounts payable $ 301     $ 224       Accrued liabilities 73     79       Income taxes payable 73     65       Total current liabilities 447     368       Bonds payable 198     171       Total liabilities 645     539       Common stock 163     200       Retained earnings 122     97       Total stockholders’ equity 285     297       Total liabilities and stockholders' equity $ 930     $ 836    

Explanation / Answer

Cash flow from operating activity :

   Net Income 62

Add: Income tax 24

Add: loss on sale of equipment (19 -(31- 10) 2

Less: profit on sale of investment(12 - 7) 5   

operating cash flow before working capital change 83

Add: decrease in inventory 38

less: increase in accounts receivable 77

less: increase in prepaid expenses 3

Add: increase in Accounts Payable 77

less: decrease in accrued liability 6

operating cash flow after working capital changes 112

less: income tax paid 16

Net cash from operating activity $96

Notes:- income tax payable Account

To cash(balancing figure) 16 By balance b/d 65

To Balance c/d 73 By Profit and loss 24

   89 89

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