Question
Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash $ 3 $ 14
Comparative financial statements for Weaver Company follow:
Weaver Company Comparative Balance Sheet at December 31 | |||||
This Year | Last Year | ||||
Assets | |||||
Cash | $ | 3 | $ | 14 | |
Accounts receivable | 330 | 240 | |||
Inventory | 110 | 170 | |||
Prepaid expenses | 9 | 7 | |||
Total current assets | 452 | 431 | |||
Property, plant, and equipment | 550 | 440 | |||
Less accumulated depreciation | 60 | 50 | |||
Net property, plant, and equipment | 490 | 390 | |||
Long-term investments | 25 | 34 | |||
Total assets | $ | 967 | $ | 855 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 260 | $ | 220 | |
Accrued liabilities | 80 | 90 | |||
Income taxes payable | 71 | 64 | |||
Total current liabilities | 411 | 374 | |||
Bonds payable | 215 | 140 | |||
Total liabilities | 626 | 514 | |||
Common stock | 235 | 300 | |||
Retained earnings | 106 | 41 | |||
Total stockholders equity | 341 | 341 | |||
Total liabilities and stockholders' equity | $ | 967 | $ | 855 | |
Weaver Company Income Statement For This Year Ended December 31 | ||||||
Sales | $ | 740 | ||||
Cost of goods sold | 420 | |||||
Gross margin | 320 | |||||
Selling and administrative expenses | 218 | |||||
Net operating income | 102 | |||||
Nonoperating items: | ||||||
Gain on sale of investments | $ | 13 | ||||
Loss on sale of equipment | (5 | ) | 8 | |||
Income before taxes | 110 | |||||
Income taxes | 33 | |||||
Net income | $ | 77 | ||||
During this year, Weaver sold some equipment for $14 that had cost $35 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $22 that had cost $9 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $65 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.
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