.Presented below are the financial statements of KJ Electronics KJ Electronics Inc. Comparative Balance Sheets September 30 Assets 2021 2020 Current Assets Cash $92000 $42980 Short Term Investments 29500 22500 Accounts Receivable 56900 22300 Inventory 102,300 90220 Long Term Assets Long term Investments 96,300 103000 Equipment 198,000 215000 Accumulated depreciation- equipment (50000) (48000) Total $525,000 $448,000 Current Liabilities Accounts Payable $85,300 $30200 Accrued Expenses payable 26700 15000 Long Term Liabilities Bonds Payable 97,300 79,570 Stockholders’ Equity Common Stock 150,000 165500 Retained Earnings 165,700 157,730 Total $525,000 $448,000 KJ Electronics Inc. Income Statement For the Year Ended September 30, 2021 Sales Revenue Less: Sales Returns and Allowances Net Sales $315,620 47,000 268,620 Cost of Goods Sold 138,260 Gross Profit 130,360 Operating Expenses excluding depreciation 75,700 Depreciation Expense 12000 Income Tax Expense Interest expense 18,120 10,163 Loss on disposal of plant assets 0 Net Income 14,377 Instructions: Compute the following ratios for 2021 using the data given above. Acid-Test Ratio Average Collection Period Debt to assets Operating Profit Margin
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.
1.Presented below are the financial statements of KJ Electronics
KJ Electronics Inc.
Comparative
|
Assets |
2021 |
2020 |
|
Current Assets |
|
|
|
Cash |
$92000 |
$42980 |
|
Short Term Investments |
29500 |
22500 |
|
|
56900 |
22300 |
|
Inventory |
102,300 |
90220 |
|
Long Term Assets |
|
|
|
Long term Investments |
96,300 |
103000 |
|
Equipment |
198,000 |
215000 |
|
equipment |
(50000) |
(48000) |
|
Total |
$525,000 |
$448,000 |
|
|
|
|
|
Current Liabilities |
|
|
|
Accounts Payable |
$85,300 |
$30200 |
|
Accrued Expenses payable |
26700 |
15000 |
|
Long Term Liabilities |
|
|
|
Bonds Payable |
97,300 |
79,570 |
|
|
|
|
|
Common Stock |
150,000 |
165500 |
|
|
165,700 |
157,730 |
|
Total |
$525,000 |
$448,000 |
KJ Electronics Inc. Income Statement
For the Year Ended September 30, 2021
|
Sales Revenue Less: Sales Returns and Allowances Net Sales |
$315,620 47,000 268,620 |
|
Cost of Goods Sold |
138,260 |
|
Gross Profit |
130,360 |
|
Operating Expenses excluding depreciation |
75,700 |
|
Depreciation Expense |
12000 |
|
Income Tax Expense Interest expense |
18,120 10,163 |
|
Loss on disposal of plant assets |
0 |
|
Net Income |
14,377 |
Instructions: Compute the following ratios for 2021 using the data given above.
- Acid-Test Ratio
- Average Collection Period
- Debt to assets
- Operating Profit Margin
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