Balance sheet information for Lang Services at the end of Year 2 (the most recent year) and Year 1 is: December 31, Year 2 December 31, Year 1 $52,500 $68,400 5,400 30,000 96,000 14,100 75,000 ? Accounts receivable Notes payable Cash Equipment Supplies Accounts payable Stockholders' equity Assets a. Prepare Lang Services' balance sheet for December 31 of each year. Note: List accounts in balance sheet order. Accounts receivable Cash Equipment Supplies Total assets Liabilities Accounts payable Notes payable Total liabilities Stockholders' equity Depreciation expense Total liabilities and stockholders' equity Ratio Current ratio $ Quick ratio + 0 Save Answers LANG SERVICES Balance Sheets + $ + + + $ $ $ Numerator + Denominator = 0= 0 4,800 24,000 $ 81,000 12,600 75,000 ? Year 2 c. Calculate the current ratio and quick ratio for Year 2. Note: Enter the numerator and denominator amounts used to compute the ratios. Result 68,400 $ 30,000 96,000 14,100 0 $ 75,000 $ 5,400 80,400 + as its current ratio 0 0 $ b. Lang Services raised $15,000 cash through issuing additional common stock early in Year 2, and it declared and paid a $51,000 cash dividend in December Year 2. Compute its net income or loss for Year 2. Note: Use a negative sign with your answer to indicate a net loss, if applicable. $0 Year 1 52,500 24,000 81,000 12,600 0 75,000 4,800 79,800 0 0 d. Assume the industry average is 1.5 for the current ratio and 1.0 for the quick ratio. Comment on Lang's current and quick ratios relative to the industry. Lang's liquidity position is the industry norm, and its quick ratio is the industry average. Please answer all parts of the question. Module +
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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