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Weller Company Cash Flow

The financial statement shows that in 2016 Weller Company had total assets of $126,000 and total liabilities and stockholder's equity of $126,000. Net income for the year was $32,000. Key events included $14,500 in depreciation expenses, $6,000 redemption of bonds, and $8,500 proceeds from the sale of equipment that originally cost $18,000 and had a book value of $8,500. The statement of cash flows prepared using the indirect method shows $35,000 cash at the end of 2016.

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Md. Omar Sakib Hossain
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259 views3 pages

Weller Company Cash Flow

The financial statement shows that in 2016 Weller Company had total assets of $126,000 and total liabilities and stockholder's equity of $126,000. Net income for the year was $32,000. Key events included $14,500 in depreciation expenses, $6,000 redemption of bonds, and $8,500 proceeds from the sale of equipment that originally cost $18,000 and had a book value of $8,500. The statement of cash flows prepared using the indirect method shows $35,000 cash at the end of 2016.

Uploaded by

Md. Omar Sakib Hossain
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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You are on page 1/ 3

1. Presented on the next page is the financial statement of Weller Company.

Assets 2016 2015


Cash 35,000 20000
Accounts receivable 33000 14000
Merchandise inventory 27000 20000
Property, Plant, and equipment 60000 78000
Accumulated depreciation (29000) (24000)
Total 126000 108,000

Liabilities and Stockholder’s Equity 2016 2015


Accounts Payable 29000 15000
Income taxes Payable 7000 8000
Bonds payable 27000 33000
Common stock 18000 14000
Retained Earnings 45000 38000
Total 126000 108000

Additional data:
 Net income is TK32000
 Dividends declared and paid were TK25000
 During the year equipment was sold for TK8500.This equipment cost TK18000 originally
and had a book value of Tk8500 at the time of sale.
 All depreciations expenses Tk14500 is in the operating expenses section.
 Redemption of bond is Tk. 6000.

Instruction:
Prepare a statement of cash flows using the indirect method.

Solution:
Weller Company

statement of cash flow (Indirect method)

for the year ended 2016


Net Income 32000
Cashflow from operating activites
Adjustments to reconcile
net Income to net cash provided by operating activites
Depriciation expense 14500
Increase in A/R (33000-14000) (19000)
Increase in inventory (27000-20000) (7000)
Increase in A/P(29000-15000) 14000
Decrease in income tax payable (8000-1000) (1000)
1500
Net Cash Provided by operating activities 33500
Cash flows from investing activites
Sale of equipment 8500
Net Cash Provided by investing activities 42000
Cash flows from financing activities
Issuance of common stock 4000
Payment of dividend (25000)
Redemption of bond (6000)
(27000)
Net increase in cash 15000
Cash at the beginning of the period 20000
Cash at the end of the period 35000

Cost- dep=BV

10,000-1000=9000

SP 8000 LOSS 1000

SP 10,000 PROFIT 1000

Sp 8500

Bv 8500

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