The Following Data Is Supplied from the Comparative Balance Sheets

question 124

Essay

The following data is supplied from the comparative balance sheets and income statement information from Webber,Inc.Webber uses the indirect method to prepare its statement of cash flows.
$\begin{array}{c}\text { Webber, Inc. }\\\text { Comparative Balance Sheets}\\\begin{array}{lrr}&12 / 31 / \text { Year } 2&12 / 31 / \text { Year } 1\\\text { Cash } & \$ 22,000 & \$ 16,000 \\\text { Accounts receivable } & 12,000 & 8,000 \\\text { Prepaid insurance } & 8,000 & 10,000 \\\text { Inventory } & 14,000 & 16,000 \\\text { Property, plant, and equipment } & 22,000 & 16,000 \\\text { Accumulated depreciation } & \underline{(6,000) }& \underline{(4,000)}\\ \text { Total } & \underline{ \$ 72,000} & \underline{62,000} \\ \text { Accounts payable } & \$ 20,000 & \$ 16,000 \\ \text { Operating expenses payable } & 14,000 & 16,000 \\ \text { Long term notes payable } & 10,000 & 12,000 \\ \text { Common stock } & 18,000 & 12,000 \\ \text { tained earnings } &\underline{ 10,000}& \underline{6,000} \\& \underline{\$ 72,000} &\underline{ \$ 62,000 }\\\text { Income Statement } & \text { Year } 2 \\\text { Revenue } & \$ 70,000 \\\text { Cost of goods sold } & \underline{40,000} \\ \text { Gross margin } & \underline{30,000 }\\\text { Depreciation expense } & 2,000 \\\text { Other operating expense } & \underline{18,000} \\\text { Net income } & \underline{\$ 10,000}\end{array}\end{array}$
Required:
a)Calculate the cash flow from operating activities (using the indirect method).
b)Calculate the cash flow from investing activities.
c)Calculate the cash flow from financing activities.

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Definitions:

Note Disclosures

Additional information provided in financial reports that complements and clarifies the main financial statements, often detailing accounting policies and methodologies.

Financing Activities

Financing activities are transactions between a business and its financiers, such as issuing debt or equity, to raise capital or pay dividends.

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, separating activities into operating, investing, and financing.

Credit Policies

The guidelines that a company follows to determine the creditworthiness of customers and the terms under which credit will be extended.