Reference no: EM132650294
Preparing Statement of Cash Flows Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31
This Year Last Year
Assets Cash $ 9 $ 21
Accounts receivable 610 380
Inventory 175 240
Prepaid expenses 10 8
Total current assets 804 649
Property, plant, and equipment 690 580
Less accumulated depreciation 80 70
Net property, plant, and equipment 610 510
Long-term investments 10 48
Total assets $ 1,424 $ 1,207
Liabilities and Stockholders' Equity
Accounts payable $ 400 $ 290
Accrued liabilities 50 60
Income taxes payable 85 78
Total current liabilities 535 428
Bonds payable 390 280
Total liabilities 925 708
Common stock 341 450
Retained earnings 158 49
Total stockholders' equity 499 499
Total liabilities and stockholders' equity $ 1,424 $ 1,207
Weaver Company Income Statement For This Year Ended December 31
Sales $880
Cost of goods sold 490
Gross margin 390
Selling and administrative expenses 203
Net operating income 187
Nonoperating items:
Gain on sale of investments $12
Loss on sale of equipment (9) 3
Income before taxes 190
Income taxes 57 Net income $133
During this year, Weaver sold some equipment for $10 that had cost $49 and on which there was accumulated depreciation of $30. In addition, the company sold long-term investments for $50 that had cost $38 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $109 of its own stock. This year Weaver did not retire any bonds.
Required:
Question 1. Using the direct method, adjust the company's income statement for this year to a cash basis.
Question 2. Using the information obtained in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.