Comparative financial statements for Weaver Company follow: 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: 1. Using the direct method, adjust the company’s income statement for this year to a cash basis. 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.
Comparative financial statements for Weaver Company follow: 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: 1. Using the direct method, adjust the company’s income statement for this year to a cash basis. 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.
Comparative financial statements for Weaver Company follow: 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: 1. Using the direct method, adjust the company’s income statement for this year to a cash basis. 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.
Comparative financial statements for Weaver Company follow:
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: 1. Using the direct method, adjust the company’s income statement for this year to a cash basis. 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.
Transcribed Image Text:# Weaver Company Comparative Balance Sheet at December 31
## Assets
**This Year | Last Year**
- **Cash:** $9 | $21
- **Accounts Receivable:** $610 | $380
- **Inventory:** $175 | $240
- **Prepaid Expenses:** $10 | $8
- **Total Current Assets:** $804 | $649
**Property, Plant, and Equipment**
- **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
**This Year | Last Year**
- **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
**Stockholders' Equity**
- **Common Stock:** $341 | $450
- **Retained Earnings:** $158 | $49
- **Total Stockholders' Equity:** $499 | $499
- **Total Liabilities and Stockholders' Equity:** $1,424 | $1,207
### Notes:
- The balance sheet compares financial data from this year to last year, displaying changes in assets, liabilities, and equity.
- **Assets:** Reflects a small decrease in cash but significant increases in accounts receivable and property, plant, and equipment.
- **Liabilities:** Display growth, particularly in accounts payable and bonds payable.
- **Stockholders' Equity:** Remains constant overall, with a notable decrease in common stock countered by an increase in retained earnings.
Transcribed Image Text:**Weaver Company Income Statement**
*For the 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)
- **Income Before Taxes:** $190
- **Income Taxes:** $57
- **Net Income:** $133
**Explanation:**
This income statement provides a financial summary for Weaver Company, indicating revenue and expenses for the year ending December 31.
- **Gross Margin** is calculated as Sales minus the Cost of Goods Sold (COGS), which shows the profit after covering production costs.
- **Net Operating Income** reflects the profit from core business activities, subtracting Selling and Administrative Expenses from Gross Margin.
- **Nonoperating Items** include gains and losses from activities not related to primary operations, such as investments and equipment sales.
- **Income Before Taxes** is the sum of Net Operating Income and Nonoperating Items.
- **Net Income** is derived after deducting Income Taxes from Income Before Taxes, representing the company's profit for the year.
Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video
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