Question
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ 10 $ 20
Comparative financial statements for Weaver Company follow:
Weaver Company Comparative Balance Sheet at December 31 | |||||
This Year | Last Year | ||||
Assets | |||||
Cash | $ | 10 | $ | 20 | |
Accounts receivable | 590 | 370 | |||
Inventory | 170 | 235 | |||
Prepaid expenses | 9 | 7 | |||
Total current assets | 779 | 632 | |||
Property, plant, and equipment | 680 | 570 | |||
Less accumulated depreciation | 75 | 60 | |||
Net property, plant, and equipment | 605 | 510 | |||
Long-term investments | 2 | 47 | |||
Total assets | $ | 1,386 | $ | 1,189 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 390 | $ | 285 | |
Accrued liabilities | 35 | 50 | |||
Income taxes payable | 84 | 77 | |||
Total current liabilities | 509 | 412 | |||
Bonds payable | 370 | 270 | |||
Total liabilities | 879 | 682 | |||
Common stock | 346 | 450 | |||
Retained earnings | 161 | 57 | |||
Total stockholders equity | 507 | 507 | |||
Total liabilities and stockholders' equity | $ | 1,386 | $ | 1,189 | |
Weaver Company Income Statement For This Year Ended December 31 | ||||||
Sales | $ | 870 | ||||
Cost of goods sold | 485 | |||||
Gross margin | 385 | |||||
Selling and administrative expenses | 207 | |||||
Net operating income | 178 | |||||
Nonoperating items: | ||||||
Gain on sale of investments | $ | 3 | ||||
Loss on sale of equipment | (1 | ) | 2 | |||
Income before taxes | 180 | |||||
Income taxes | 54 | |||||
Net income | $ | 126 | ||||
During this year, Weaver sold some equipment for $18 that had cost $48 and on which there was accumulated depreciation of $29. In addition, the company sold long-term investments for $48 that had cost $45 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $104 of its own stock. This year Weaver did not retire any bonds.
Required:
1. Using the direct method, adjust the companys 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.
Part 2
Using the direct method, adjust the company's income statement for this year to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Weaver Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: 0Step by Step Solution
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