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Required information

[The following information applies to the questions displayed below.]

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

Weaver Company Statement of Cash Flows For the year ended 31st, December Amount $ Operating Activities Net Income 63 Adjustments: Non-Cash adjustment: Depreciation (93+16-85) 24 Loss on sale of equipment (40-16-20)                     4 Profit on sale of investment (10-3)                   -7 Tax expenses                  27 Due to changes in Working capital Due to changes in accounts receivable (340-240) -100 Due to changes in Inventories (125-175)                  50 Due to changes in Pre-paid expenses (10-6)                   -4 Due to changes in accounts payable (310-230)                  80 Due to changes in accruals (60-72)                 -12 Taxes paid (34+27-40)                 -21 Net Cash provided (used) by operating activities                104 Investing Activities Cash used to acquire gross fixed assets (610+40-470)              -180 Cash from sale of equipment                  20 Due to change in long-term investments                  10 Net cash provided (used) by investing activities              -150 Financing Activities Due to change in bonds payable (290-180)                110 Due to change in common stock (210-250)                 -40 Payment of common dividends (63-(107-74))                 -30 Net cash provided (used) by investing activities)                  40 Net increase/decrease in cash                   -6 Add: Cash balance at the begining of the year                  15 Cash balance at the end of the year                     9

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