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Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year				Last Year
Assets
Cash and cash equivalents	$	16			$	12
Accounts receivable		296				230
Inventory		157				195
Prepaid expenses		9				6
Total current assets		478				443
Property, plant, and equipment		505				427
Less accumulated depreciation		(85	)			(71	)
Net property, plant, and equipment		420				356
Long-term investments		28				34
Total assets	$	926			$	833
Liabilities and Stockholders' Equity
Accounts payable	$	304			$	226
Accrued liabilities		70				78
Income taxes payable		71				64
Total current liabilities		445				368
Bonds payable		196				171
Total liabilities		641				539
Common stock		163				201
Retained earnings		122				93
Total stockholders’ equity		285				294
Total liabilities and stockholders' equity	$	926			$	833

Weaver Company Income Statement For This Year Ended December 31
Sales					$	752
Cost of goods sold						447
Gross margin						305
Selling and administrative expenses						219
Net operating income						86
Nonoperating items:
Gain on sale of investments	$	7
Loss on sale of equipment		(2	)			5
Income before taxes						91
Income taxes						24
Net income					$	67

During this year, Weaver 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 $13 that had cost $6 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $38 of its own stock. This year Weaver did not retire any bonds.

Required:

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

Weaver Company
Statement of Cash Flows - Indirect Method
Year Ended December 31
Cash flow from operating activities
Net Income before tax		91
Adjust to reconcile net income to
Net cash provided by operating activities:
Depreciation expense	24
Gain on sale of investments	-7
Loss on sale of equipment	2
Increase in Accounts receivable	-66
Decrease in Inventories	38
Increase in Prepaid expenses	-3
Increase in Accounts Payable	78
Decrease in accrued liability	-8
		58
Cash generating from operating activities		149
Less: Tax Paid		-17
Net Cash provided by operating activities		132
Cash flow from investing activities
Proceeds from Long-term investments	13
Proceeds from sale of Equipment	18
Purchase of equipment	-108
Net cash used in investing activities		-77
Cash flow from financing activities
Purchase of treasury stock	-38
Proceeds from Bonds Payable	25
Dividend Paid	-38
Net cash used in financing activities		-51
Net decrease in cash		4
Cash and cash equivalents, December 31, Last Year		12
Cash and cash equivalents, December 31, This Year		16