Activity 4.b - Prepare a Statement of Cash Flows Prepare the Statement of Cash Flows for Smart Touch Learning for the month ended December 31, 2016 from the provided information. Within each section of the statement, use the drop-down menus to enter the accounts. Then enter the account balances and calculate ending balances. Enter decreases in cash with a minus sign or parentheses. Cash flows from Receipts: Payments: For rent Collections from customers For utilities For salaries Acquisition of Land Net cash provided (used) by Cash flows from Cash balance, December 1, 2016 is $18,600 Owner withdrawal Transactions Owner contribution Dec. 1 The owner contributed an additional $7,800 cash to the business in exchange for capital. Net cash provided (used) by Net increase (decrease) in cash Cash balance, December 1, 2016 7 14 17 23 Net cash provided (used) by operating activities Cash flows from investing activities 26 Cash balance, December 31, 2016 Purchased equipment for $1,700 on account. Paid $19,800 cash for land. Paid cash expenses: office rent, $1,600; employees' salaries, $1,300; utilities, $90. The owner withdrew $2,500. Earned service revenue for the month, $4,800, receiving cash. operating activities investing activities financing activities financing activities SMART TOUCH LEARNING Statement of Cash Flows Month Ended December 31, 2016 -1600 -90 -1300 -19800 -2500 7800 4800 -2990 4210 (14390) 1700 (14390) 18600 (14390)
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.
I am having trouble finding the red values, can someone help me determine what they are and how to solve them?
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