PROBLEM 15–4 Prepare a Cash Flow Statement (Indirect Method) (LO3)

PROBLEM 15–4 Prepare a Cash Flow Statement (Indirect Method) (LO3)Comparative financial statements for Weaver Company follow:WEAVER COMPANYComparative Balance SheetDecember 31, 2004, and 20032004 2003AssetsCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 $ 15Accounts receivable . . . . . . . . . . . . . . . . . . . 340 240Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 175Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 10 6Plant and equipment . . . . . . . . . . . . . . . . . . 610 470Less accumulated depreciation . . . . . . . . (93) (85)Long-term investments . . . . . . . . . . . . . . . . 16 19Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $1,017 $840Liabilities and Shareholders’ EquityAccounts payable . . . . . . . . . . . . . . . . . . . . $ 310 $230Accrued liabilities . . . . . . . . . . . . . . . . . . . . 60 72Bonds payable . . . . . . . . . . . . . . . . . . . . . . . 290 180Deferred income taxes . . . . . . . . . . . . . . . . . 40 34Common shares . . . . . . . . . . . . . . . . . . . . . . 210 250Retained earnings . . . . . . . . . . . . . . . . . . . . 107 74Total liabilities and shareholders’ equity . . . $1,017 $840WEAVER COMPANYIncome StatementFor the Year Ended December 31, 2004Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800Less cost of goods sold . . . . . . . . . . . . . . . . . . . 500Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 300Less operating expenses . . . . . . . . . . . . . . . . . . 213Net operating income . . . . . . . . . . . . . . . . . . . . 87Nonoperating items:Gain on sale of investments . . . . . . . . . . . . . . $7Loss on sale of equipment . . . . . . . . . . . . . . . 4 3Income before taxes . . . . . . . . . . . . . . . . . . . . . . 90Less income taxes . . . . . . . . . . . . . . . . . . . . . . . 27Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63During 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.