. Prepare a new segmented income statement for the company. I hould be entered as 12.3).)
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has
two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable
costs. A contribution format segmented income statement for the company's most recent year is given:
Office
Total Company
100.0%
54.0%
46.0%
22.4%
Minneapolis
$ 420,000
252,000
168,000
63,000
$ 105,000
Chicago
$ 105,000
$ 525,000
283,500
Sales
100%
100%
Variable expenses
Contribution margin
Traceable fixed expenses
30%
60%
40%
15%
31,500
73,500
54,600
18,900
70%
241,500
117,600
52%
Office segment margin
123,900
23.6%
18%
25%
Common fixed expenses not traceable to offices
84,000
16.0%
Net operating income
39,900
7.6%
3. Assume that sales in Chicago increase by $35,000 next year and that sales in Minneapolis remain unchanged. Assume no change
in fixed costs.
a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234
should be entered as 12.3).)
Segments
Total Company
Chicago
Minneapolis
Amount
%
Amount
%
Amount
%
0.0
0.0
0.0
0.0 $
0.0 $
0.0
0.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96697503-e8ee-44ec-ae65-6c42fedaffd7%2Fa8faa5be-7f8a-47dc-8164-732d51c58def%2Fypgnzxl_processed.png&w=3840&q=75)
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