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Cash Flow Solve the Weimer Cash Flow Problem below. Use the Excel Worksheet approach. Include conversion to the direct method for cash from operations. Weimer LTD Co. A. Comparative balance sheets for 2011 and 2010 and an income statement for 2011 are provided below for Weimer LTD Corp. Additional information from the accounting records of Weimer LTD Corp. also is provided. Weimer LTD Corp. Comparative Balance Sheets December 31, 2011 and 2010 ($ in 000) Assets: 2011 2010 Cash $830 $1,055 Accounts receivable 1,800 1,390 Allowance for bad debts (50) (40) Inventory 2,400 1,575 Land 2,300 1,800 Building 6,300 6,300 Less: Accumulated depreciation (900) (810) Equipment 7,750 6,750 Less: Accumulated depreciation (1,585) (1,440) $18,845 $16,580 Liabilities: Accounts payable $1,950 $1,175 Income tax payable 400 0 Accrued expenses payable 800 850 Lease liability - land 725 0 Note payable 100 100 Less: Discount (20) (25) Bonds Payable 200 150 Shareholders' Equity: Common stock 9,050 9,000 Paid-in capital - excess of par 2,350 2,025 Retained earnings 3,290 3,325 Less: Treasury stock (20) $18,845 $16,580 1 Weimer LTD Corp. Income Statement For year ended December 31, 2011 ($ in 000) Revenues: Sales Gain on sale of land Expenses: Cost of goods sold Depreciation expense Loss on sale of equipment Lower of cost or market inventory adj. Equipment impairment charge Bad debt expense Interest expense Operating expenses Income before tax Income tax expense Net income $7,935 100 $1,800 1,035 20 200 800 60 25 1,400 $8,035 5,340 $2,695 1,000 1,695 Additional information from the accounting records: a. During 2111, equipment with a cost of $1,000 (80% depreciated) was sold. b. During 2011, land with a cost of $225 was sold. c. The Statement of Shareholders' equity reveals reductions of $375 for stock dividends and $1,350 for cash dividends. d. During 2011, land was acquired by signing a long term lease. Required: 1. Prepare the statement of cash flow by the indirect method using the worksheet format. Although a \"formal\" statement is not required, your finished product should have all the information disclosed on a formal statement. 2. Prepare \"cash flows from operating activities\" by the direct method using the conversion schedule 2 Weimer Template Cash Flow Receivables Allowance bad debts Inventory Land Building Accumulated depreciation Equipment Accumulated depreciation Accounts payable Taxes payable Accrued expenses payable Lease lia. - land Note payable Discount on note payable Bonds payable Common stock Paid-in excess of par Retained earnings Treasury stock Totals Net change = cash change Net change in balance Debit Credit Key 410 10 825 500 Debits Key Credits Net change Net income 90 1,000 145 775 400 Cash operations Investing 50 725 5 50 50 325 Cash Investing Financing 35 2,820 - 20 2,595 225 Cash Financing Total cash change Non Cash Disclosure Conversion to Direct Method Sales/Cash from customers Cash operations 7935 Cost of sales/cash for goods 1800 S & A expenses/cash for expenses 1400 BD expense Depreciation expense-eliminate Lower of cost or market adj Equipmnet impairment Loss on equipment Gain on land Interest expense/cash interest 60 1035 200 800 20 Tax expense/cash for tax 1000 Net income 100 25 1695