Question

Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash	$	16			$	12
Accounts receivable		293				230
Inventory		157				195
Prepaid expenses		8				6
Total current assets		474				443
Property, plant, and equipment		513				434
Less accumulated depreciation		(83	)			(71	)
Net property, plant, and equipment		430				363
Long-term investments		24				31
Total assets	$	928			$	837
Liabilities and Stockholders' Equity
Accounts payable	$	302			$	225
Accrued liabilities		71				79
Income taxes payable		71				64
Total current liabilities		444				368
Bonds payable		198				172
Total liabilities		642				540
Common stock		163				201
Retained earnings		123				96
Total stockholders’ equity		286				297
Total liabilities and stockholders' equity	$	928			$	837

Weaver Company Income Statement For This Year Ended December 31
Sales					$	753
Cost of goods sold						449
Gross margin						304
Selling and administrative expenses						220
Net operating income						84
Nonoperating items:
Gain on sale of investments	$	5
Loss on sale of equipment		(1	)			4
Income before taxes						88
Income taxes						23
Net income					$	65

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.)

Answer 1

Solution:

Statement of Cash Flows (Partial)
For the current year
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$65.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense ($83 - $71)	$12.00
Loss on sale of equipment	$1.00
Gain on sale of investment	-$5.00
Increase in accounts receivables ($293 - $230)	-$63.00
Decrease in inventory ($195 - $157)	$38.00
Increase in prepaid expenses ($8 - $6)	-$2.00
Increase in accounts payable ($302 - $225)	$77.00
Decrease in accrued Liabilities ($79 - $71)	-$8.00
Increase in income taxes payable ($71 - $64)	$7.00	$57.00
Net Cash provided by operating activities		$122.00