Comparative financial statements for Weaver Company follow:

Weaver Company Comparative Balance Sheet at December 31
	This Year			Last Year
Assets
Cash	$	6		$	11
Accounts receivable		270			210
Inventory		105			155
Prepaid expenses		6			4
Total current assets		387			380
Property, plant, and equipment		520			410
Less accumulated depreciation		95			60
Net property, plant, and equipment		425			350
Long-term investments		26			31
Total assets	$	838		$	761
Liabilities and Stockholders' Equity
Accounts payable	$	230		$	205
Accrued liabilities		45			60
Income taxes payable		73			61
Total current liabilities		348			326
Bonds payable		165			110
Total liabilities		513			436
Common stock		254			300
Retained earnings		71			25
Total stockholders’ equity		325			325
Total liabilities and stockholders' equity	$	838		$	761

Weaver Company Income Statement For This Year Ended December 31
Sales					$	710
Cost of goods sold						405
Gross margin						305
Selling and administrative expenses						228
Net operating income						77
Nonoperating items:
Gain on sale of investments	$	11
Loss on sale of equipment		(8	)			3
Income before taxes						80
Income taxes						24
Net income					$	56

During this year, Weaver sold some equipment for $11 that had cost $32 and on which there was accumulated depreciation of $13. In addition, the company sold long-term investments for $16 that had cost $5 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $46 of its own stock. This year Weaver did not retire any bonds.

Required:

1. Using the direct method, adjust the company’s income statement for this year to a cash basis.

2. Using the information obtained in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.

Answer rating: 100% (QA)

Answer 1 Adjusted Income Statement for Cash Basis Weaver Company Adjusted Income Statement for Cash ... View the full answer