Comparative financial statements for Weaver Company follow. Weaver Company Comparative Balance Sheet at December 31 This Year Last Year $ 2 15 69 390 35 $1,000 $ 873 Assets Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 270 225 480 350 273 120 393 $1,000 393 873 Weaver Company Income Statement For This Year Ended December 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $ 750 425 325 203 122 130 91 During this year, Weaver sold some equipment for $15 that had cost $36 and on which there was accumulated depreciation of $17. In addition, the company sold long-term investments for $24 that had cost $12 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $77 of its own stock. This year Weaver did not retire any bonds. Required: 1. Using the direct method, adjust the company's income statement for this year to a cash basis. 2. Using the information obtained in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year Required 1 Required 2 Using the direct method, adjust the company's income statement for this year to a cash basis. to be deducted should be indicated with a minus sign.) Weaver Company Direct Method of Determining the Net Cash Flows from Operating Activities Sales Adjustments to a cash basis: Increase in accounts receivable Cost of goods sold Adjustments to a cash basis: Decrease in inventory Increase in accounts payable Selling and administrative expenses Adjustments to a cash basis: Increase in prepaid expenses Decrease in accrued liabilities Depreciation ciation Income taxes Adjustments to a cash bass Increase in income taxes payable Net cash provided by operating 20 vites Required 2 > statement of cash flows for this year. (Cash outflows and amounts to be deducted shou Weaver Company Statement of Cash Flows For This Year Ended December 31 Operating activities: Cash received from customers Less cash disbursements for: Cost of merchandise purchased Selling and administrative expenses Income taxes Total cash disbursements Net cash provided by operating activities Investing activities: Proceeds from sale of long-term investments Proceeds from sale of equipment Additions to property, plant and equipment Net cash used in investing activities Financing activities: Issuance of bonds payable Repurchase of common stock Cash dividends paid Net cash used in financing activities Net decrease in cash and cash equivalents Beginning cash and cash equiva ents Ending cash and cash equiva
