Question

Create a statement of cash flows with the information provided.
PROBLEM 13-7 Prepare a Statement of Cash Flows LO13-1, LO13-2 Comparative financial statements for Weaver Company follow: Weaver someony Comparte cesheet an/3 This Year Est Your a5 9 Assets Cash and cash equilvalents. $ 15 Accounts receivable 340 240 Inventory ...... 125 175 Prepaid expenses 10 Total current assets 484 436 Property, plant, and equipment ............ 610 470 Less accumulated depreciation .......... 93 Net property, plant, and equipment 517 385 Long-term Investments 16 Total assets ..... $1.017 $840 Llabilitles and Stockholders' Equity Accounts payable $ 310 $230 Accrued liabilities .... Income taxes payable ............ 34 Total current liabilities ......... 410 336 Bonds payable .... 290 Total labilities 700 516 Common stock ........ 210 250 Retained earnings .......... 107 Total stockholders' equity ........ 324 Total llabilities and stockholders' equity ..... $1.017 $840 | | | | |༔ ཧཱུྃ ༄༅| | |] ། | | | | | སྒྱུཥ ཨ| % | | ༔ *| *[ | 60 72 འs0

Answer 1

Cash from Operating activities to be computed by taking net profit from income statement in indirect method.

To the net profit, all non cash items and non operating expenses to be added back to arrive operating activities.

Income tax paid is to be considered in cash flow statement instead of income tax recognized in income statement.

Please go through the following attachments for solution.

Indirect Method 1. Cash from Operating activities Particulars Amount $ Note CASH FROM OPERATING ACTIVITIES Net Income 63 Add: Depreciation Add:Loss on sale of Equipment Note 1 24 4 Less: Gain on sale of Investments Add: Income tax expense 27 Change in Working Capital Note 2 14 Net Operating Activities before Tax 125 Note 3 Less: Income tax paid 21 Net Cash from Operating Activities 104 Note 1 Accumulated Depreciation Debit Credit Amount Amount Balance b/d 85 Equipment 16 Depreciation 24 (sold machine) (Balancing number) Balance c/d 93 Total 109 Total 109 Note:2 Schedule of Change in Working Capital Particulars Amount Accounts Receivable = 240-340 Less -100 Inventory=175-125 Prepaid Expenses = 6-10 Accounts Payable =230-310 Accrued liabilities = 72-60 Add 50 Less -4 Add 80 Less -12 Working Capital Change 14 Increase in receivables is a negative cash flow Increase in Payables is a positive cash flow Note 3 Income taxes Payable Debit Credit Amount Amount Balance b/d 34 Cash 21 Income Statement 27 (Balancing number) Balance c/d 40 61 Total Total 61

2) Statement of Cash Flows Indirect Method This Year Note Amount $ Particulars Note 6 Retained earnings CASH FROM OPERATING ACTIVITIES Net Income Add: Depreciation Debit Credit 63 Amount Amount Dividend paid 30 Beginning Note 1 74 24 Add:Loss on sale of Equipment (Balancing number) Net Profit 4 63 Less: Gain on sale of Investments Aad: Income tax expense |Change in Working Capital Net Operating Activities before Tax Less: Income tax paid Ending 27 107 Note 2 14 137 137 125 Note 3 21 Net Cash from Operating Activities Note 7 IA 104 Common stock CASH FROM INVESTING ACTIVITIES Sale of Equipment Sale of Investments Note 4 Credit 20 Debit Amount Amount Note 5 10 Purchase of Property,plant& Equipment Net cash from Investing activities Balance b/d Note 4 -180 250 -150 Cash 40 Balance c/d CASH FROM FINANCING ACTIVITIES 210 Common stock repurchase Payment of Dividends New issue of Bonds payable=180-290 Net Cash from Financing Activities Note 7 -40 Total 250 Total 250 -30 Note 6 110 40 NET INCREASE OR DECREASE IN CASH Add: Opening Cash Balance A+B+C -6 Note 4 Property, Plant & Equipment 15 ENDING CASH BALANCE Debit Credit Amount Amount Balance b/d 470 Cash 20 180 Loss on sale Note:2 Cash Accu. Depreciation Balance c/d Schedule of Change in Working Capital (purchases) 16 Particulars (Balancing Figure) Amount 610 Accounts Receivable = 240-340 650 Total Less -100 Total 650 Inventory=175-125 Prepaid Expenses = 6-10 Accounts Payable =230-310 Accrued liabilities = 72-60 Working Capital Change Add 50 Less -4 Note 5 Add 80 Investments -12 Credit Debit Less Атount Amount Balance b/d Gain on sale 19 Cash 14 10 7. Increase in receivables is a negative cash flow Balance c/d Increase in Payables is a positive cash flow 16 Total 26 Total 26 Note 1 Accumulated Depreciation Credit Debit Amount Amount Balance b/d 85 16 Depreciation Equipment 24 (sold machine) Balance c/d (Balancing number) 93 Total 109 Total 109 Note 3 Income taxes Payable Debit Amount Credit Amount Balance b/d 34 Cash 21 Income statement 27 (Balancing number) Balance c/d 40 Total 61 Total 61