Reference no: EM13971449

PROBLEM 15-4 Prepare a Cash Flow Statement (Indirect Method) (LO3)

Comparative financial statements for Weaver Company follow:

WEAVER COMPANY

Comparative Balance Sheet

December 31, 2004, and 2003

2004 2003

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 $ 15

Accounts receivable . . . . . . . . . . . . . . . . . . . 340 240

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 175

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 10 6

Plant and equipment . . . . . . . . . . . . . . . . . . 610 470

Less accumulated depreciation . . . . . . . . (93) (85)

Long-term investments . . . . . . . . . . . . . . . . 16 19

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $1,017 $840

Liabilities and Shareholders' Equity

Accounts payable . . . . . . . . . . . . . . . . . . . . $ 310 $230

Accrued liabilities . . . . . . . . . . . . . . . . . . . . 60 72

Bonds payable . . . . . . . . . . . . . . . . . . . . . . . 290 180

Deferred income taxes . . . . . . . . . . . . . . . . . 40 34

Common shares . . . . . . . . . . . . . . . . . . . . . . 210 250

Retained earnings . . . . . . . . . . . . . . . . . . . . 107 74

Total liabilities and shareholders' equity . . . $1,017 $840

WEAVER COMPANY

Income Statement

For the Year Ended December 31, 2004

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800

Less cost of goods sold . . . . . . . . . . . . . . . . . . . 500

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

Less operating expenses . . . . . . . . . . . . . . . . . . 213

Net operating income . . . . . . . . . . . . . . . . . . . . 87

Nonoperating items:

Gain on sale of investments . . . . . . . . . . . . . . $7

Loss on sale of equipment . . . . . . . . . . . . . . . 4 3

Income before taxes . . . . . . . . . . . . . . . . . . . . . . 90

Less income taxes . . . . . . . . . . . . . . . . . . . . . . . 27

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63

During 2004, the company 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. Cash dividends totaling $30 were paid during 2004.

Required:

1. Using the indirect method, determine the cash provided by operating activities for 2004.

2. Use the information in (1) above, along with an analysis of the remaining balance sheet accounts, and prepare a cash flow statement for 2004.