Homework SourseComparative financial statements for Weaver Company follow D
Comparative financial statements for Weaver Company follow:
During this year, Weaver sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds.
Required:
1. Using the indirect method, determine the net cash provided by/used in operating activities for this year. (List any deduction in cash and cash outflows as negative amounts.)
| Weaver Company Comparative Balance Sheet at December 31 | |||||
| This Year | Last Year | ||||
| Assets | |||||
| Cash | $ | 9 | $ | 15 | |
| Accounts receivable | 340 | 240 | |||
| Inventory | 125 | 175 | |||
| Prepaid expenses | 10 | 6 | |||
| Total current assets | 484 | 436 | |||
| Property, plant, and equipment | 610 | 470 | |||
| Less accumulated depreciation | 93 | 85 | |||
| Net property, plant, and equipment | 517 | 385 | |||
| Long-term investments | 16 | 19 | |||
| Total assets | $ | 1,017 | $ | 840 | |
| Liabilities and Stockholders\' Equity | |||||
| Accounts payable | $ | 310 | $ | 230 | |
| Accrued liabilities | 60 | 72 | |||
| Income taxes payable | 40 | 34 | |||
| Total current liabilities | 410 | 336 | |||
| Bonds payable | 290 | 180 | |||
| Total liabilities | 700 | 516 | |||
| Common stock | 210 | 250 | |||
| Retained earnings | 107 | 74 | |||
| Total stockholders’ equity | 317 | 324 | |||
| Total liabilities and stockholders\' equity | $ | 1,017 | $ | 840 | |
Solution
1. Using the indirect method, determine the net cash provided by/used in operating activities for this year.
| Net income | 63 | |
| Adjustment to reconcile net income | ||
| Depreciation exp | 24 | |
| Gain on sale of investment | (7) | |
| Loss on sale of equipment | 4 | |
| Increase account receivable | (100) | |
| Increase prepaid exp | (4) | |
| Decrease inventory | 50 | |
| Increase account payable | 80 | |
| Increase income tax payable | 6 | |
| decrease accured liabilities | (12) | |
| Net cash flow from operating activities | 104 | |
