PROBLEM 15-4 Prepare a Cash Flow Statement (Indirect Method) (LO3)
Comparative financial statements for Weaver Company follow:
WEAVER COMPANY
Comparative Balance Sheet
December 31, 2004, and 2003
2004 2003
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 $ 15
Accounts receivable . . . . . . . . . . . . . . . . . . . 340 240
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 175
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 10 6
Plant and equipment . . . . . . . . . . . . . . . . . . 610 470
Less accumulated depreciation . . . . . . . . (93) (85)
Long-term investments . . . . . . . . . . . . . . . . 16 19
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $1,017 $840
Liabilities and Shareholders' Equity
Accounts payable . . . . . . . . . . . . . . . . . . . . $ 310 $230
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 60 72
Bonds payable . . . . . . . . . . . . . . . . . . . . . . . 290 180
Deferred income taxes . . . . . . . . . . . . . . . . . 40 34
Common shares . . . . . . . . . . . . . . . . . . . . . . 210 250
Retained earnings . . . . . . . . . . . . . . . . . . . . 107 74
Total liabilities and shareholders' equity . . . $1,017 $840
WEAVER COMPANY
Income Statement
For the Year Ended December 31, 2004
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800
Less cost of goods sold . . . . . . . . . . . . . . . . . . . 500
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Less operating expenses . . . . . . . . . . . . . . . . . . 213
Net operating income . . . . . . . . . . . . . . . . . . . . 87
Nonoperating items:
Gain on sale of investments . . . . . . . . . . . . . . $7
Loss on sale of equipment . . . . . . . . . . . . . . . 4 3
Income before taxes . . . . . . . . . . . . . . . . . . . . . . 90
Less income taxes . . . . . . . . . . . . . . . . . . . . . . . 27
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63
During 2004, the company sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Cash dividends totaling $30 were paid during 2004.
Required:
1. Using the indirect method, determine the cash provided by operating activities for 2004.
2. Use the information in (1) above, along with an analysis of the remaining balance sheet accounts, and prepare a cash flow statement for 2004.