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WEELER COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total Sales Cost of goods sold Gross profit Operating expenses Income from operations Interest expense 2010 $ 35,000 33,000 27,000 60,000 (29,000) $126,000 WELLER COMPANY Income Statement For the Year Ended December 31, 2010 Income before income taxes Income tax expense Net income $ 29,000 7.000 27,000 18,000 45,000 $126,000 Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. 2009 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108,000 $242,000 175,000 67,000 24,000 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 43,000 3,000 40,000 8,000 $ 32,000 Additional data: 1. Dividends declared and paid were $25,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. *P17-8A Data for Weller Company are presented in P17-7A. Further analysis reveals the following. Instructions (a) Prepare a statement of cash flows for Weller Company using the direct method. (b) Compute free cash flow.

WEELER COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total Sales Cost of goods sold Gross profit Operating expenses Income from operations Interest expense 2010 $ 35,000 33,000 27,000 60,000 (29,000) $126,000 WELLER COMPANY Income Statement For the Year Ended December 31, 2010 Income before income taxes Income tax expense Net income $ 29,000 7.000 27,000 18,000 45,000 $126,000 Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. 2009 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108,000 $242,000 175,000 67,000 24,000 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 43,000 3,000 40,000 8,000 $ 32,000 Additional data: 1. Dividends declared and paid were $25,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. *P17-8A Data for Weller Company are presented in P17-7A. Further analysis reveals the following. Instructions (a) Prepare a statement of cash flows for Weller Company using the direct method. (b) Compute free cash flow.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cashflow Statment Problem 01

WEELER COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total Sales Cost of goods sold Gross profit. Operating expenses Income from operations Interest expense 2010 $ 35,000 33,000 27,000 60,000 (29,000) $126,000 Income before income taxes Income tax expense Net income $ 29,000 7,000 27,000 WELLER COMPANY Income Statement For the Year Ended December 31, 2010 18,000 45,000 $126,000 Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. 2009 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108.000 $242,000 175,000 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 67,000 24,000 43,000 3,000 40,000 8,000 $ 32,000 Additional data: 1. Dividends declared and paid were $25,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. *P17-8A Data for Weller Company are presented in P17-7A. Further analysis reveals the following. Instructions (a) Prepare a statement of cash flows for Weller Company using the direct method. (b) Compute free cash flow.
Transcribed Image Text:WEELER COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Merchandise inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total Sales Cost of goods sold Gross profit. Operating expenses Income from operations Interest expense 2010 $ 35,000 33,000 27,000 60,000 (29,000) $126,000 Income before income taxes Income tax expense Net income $ 29,000 7,000 27,000 WELLER COMPANY Income Statement For the Year Ended December 31, 2010 18,000 45,000 $126,000 Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. 2009 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 $ 15,000 8,000 33,000 14,000 38,000 $108.000 $242,000 175,000 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 67,000 24,000 43,000 3,000 40,000 8,000 $ 32,000 Additional data: 1. Dividends declared and paid were $25,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. *P17-8A Data for Weller Company are presented in P17-7A. Further analysis reveals the following. Instructions (a) Prepare a statement of cash flows for Weller Company using the direct method. (b) Compute free cash flow.
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