Question
Solve the Weimer Cash Flow Problem below. Use the Excel Worksheet approach. Include conversion to the direct method for cash from operations. Attach Solution to
Solve the Weimer Cash Flow Problem below. Use the Excel Worksheet approach. Include conversion to the direct method for cash from operations. Attach Solution to your Pre-Exam.
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 $785 $1,325
Accounts receivable 1,800 1,390
Allowance for bad debts (35) (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)
$18,815 $16,850
Liabilities:
Accounts payable $1,950 $1,175
Income tax payable 400 250
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 9,450 9,000
Paid-in capital excess of par 2,250 2,025
Retained earnings 2,980 3,325
Less: Treasury stock (20) 0
$18,815 $16,850
Weimer LTD Corp.
Income Statement
For year ended December 31, 2011 ($ in 000)
Revenues:
Sales $7,935
Gain on sale of land 175 $8,110
Expenses:
Cost of goods sold $1,800
Depreciation expense 1,035
Loss on sale of equipment 20
Lower of cost or market inventory adj. 300
Equipment impairment charge 800
Bad debt expense 50
Interest expense 25
Operating expenses 1,400 5,430
Income before tax $2,680
Income tax expense 1,000
Net income 1,680
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 $675 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
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