Description
PROBLEM 14–7 Prepare a Statement of Cash Flows LO14–1, LO14–2
Comparative financial statements for Weaver Company follow:
[Table in the picture]
During this year, Weaver 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. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds. Required:
1. Using the indirect method, determine the net cash provided by operating activities for this year.
2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.
PROBLEM 14–9 Understanding a Statement of Cash Flows LO14–1, LO14–2 Brock Company is a merchandiser that prepared the statement of cash flows and income statement provided below:
Required: Assume you have been asked to teach a workshop to the employees within Brock Company’s Marketing Department. The purpose of your workshop is to explain how the statement of cash flows differs from the income statement. Your audience is expecting you to explain the logic underlying each number included in the statement of cash flows. Prepare a memo that explains the format of the statement of cash flows and the rationale for each number included in Brock’s statement of cash flows.
Garrison, Ray; Garrison, Ray. Managerial Accounting (Page 716). McGraw-Hill Higher Education. Kindle Edition.
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Explanation & Answer

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PROBLEM 14–7
Operating Activities:Net Income
Add: Loss on sale of Equipment
Less: Gain on sale of Investment
Add: Depreciation (93-85+16)
Working capital Adjustment:
Less: Increase Account Receivable
Add: Decrease Inventory
Less: Increase Prepaid Exp
Add: Increase Account Payable
Less: Decrease Accrued Liab
Add: Increase Income tax payable
Net Cash Inflow (Outflow) from Operating Activities
63.00
4.00
7.00
24.00
100.00
50.00
4.00
80.00
12.00
6.00
104.00
Operating Activities:As calculated above
Investing Activities:Add: Sold Equipment
Add: Sold Investment
Less: Purchase Plant Equipmnet ($610 - $470 + $40)
Net Cash Inflow (Outflow) from Investing Activities
104.00
20.00
10.00
180.00
(150.00)
Financing Activities:Add: Issue Bonds
Less: Repurchased own stock
Less: Paid D...
