Problem 138A Prepare a Statement of Cash Flows Indirect Meth

Problem 13-8A Prepare a Statement of Cash Flows (Indirect Method) [LO2, LO Comparative financial statements for Weaver Company follow Weaver Company Comparative Balance Sheet December 31, 2009 and 2008 2009 2008 Assets Cash Accounts receivable Inventory Prepaid expenses Plant and equipment $31 308 156 $13 230 195 5 427 (71) 34 $833 Less accumulated depreciation Long-term investments Total assets 506 (86) 28 $951 Liabilities and Stockholders\' Equity Accounts payable Accrued liabilities Bonds payable Deferred income taxes Common stock Retained earnings Total liabilities and stockholders\' equity $305 71 196 73 161 145 $951 $225 79 172 64 201 92 $833 Weaver Company Income Statement For the Year Ended December 31, 2009 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Non operating items $753 449 304 220 84 Gain on sale of investments Loss on sale of equipment24 Income before taxes Income taxes Net income $66 During 2009, the company sold some equipment for $18 that had cost $30 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $12 that had cost $6 when purchased several years ago. Cash dividends totaling $13 were paid duning 2009 Required Using the indirect method, prepare a statement of cash flows for 2009, (Negative amounts should be indicated with a minus sign. Omit the $\" sign in your response.)

Solution

Solution:

Weaver Company
Statement of Cash Flows (Indirect Method)
For year ended December 31, 2009
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$66.00
Adjustments to reconcile net income to net cash flow from operating activitiess:
Gain on sale of investment	-$6.00
Loss on sale of equipment	$2.00
Depreciation ($86-$71+$10)	$25.00
Changes in current operating assets and liabilities:
Increase in accounts receivables ($308 - $230)	-$78.00
Decrease in inventories ($195 - $156)	$39.00
Increase in prepaid expenses ($8 - $5)	-$3.00
Increase in accounts payable ($305 - $225)	$80.00
Decrease in accrued liabilities ($79 - $71)	-$8.00
Increase in deferred income taxes ($73 - $64)	$9.00
Net cash flow from operating activities		$126.00
Cash Flow from Investing Activities:
Cash received from sale of investments	$12.00
Cash received from sale of Equipment	$18.00
Cash paid for purchase of Property, plant & Equipment ($506-$427+$30)	-$109.00
Net cash flow used for investing activities		-$79.00
Cash Flow from Financing Activities:
Purchase of treasury stock	-$40.00
Cash paid for dividends	-$13.00
Proceed from isue of bond ($196 - $172)	$24.00
Net cash flow from financing activities		-$29.00
Net Increase / (Decrease) in Cash		$18.00
Cash balance at beginning of year		$13.00
Cash balance at end of year		$31.00