Problem 13-8A Prepare a Statement of Cash Flows (Indirect Method) [LO2, LO Compa
ID: 2390690 • Letter: P
Question
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.)Explanation / Answer
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) $25.00Changes 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