Below transaction summaries relate to Jetters Co. as at 30th June 2019. Cash balance as at 1of July 2019 12500 Cash receipts from the customers 720000 Purchase of land 250000 Obtained a bank loan 35000 Business cash deposits in the bank account 10000 Purchase of 2 vehicles for 20000 each Repayment of the loan 5000 Payments to vendors 562000 Bad debt 5000 Borrowings from a financial institution 45000 Sale of investment 25000 Depreciation 24000 Payment of operating expenses 115000 Payment of income taxes 52000 Share capital issued 150000 Payments for interest expense 21000 Sale of machinery 61000 Sale of motor vehicle 15000 Prepare the cashflow statement for Jetters Co. for the year ended 30th June 2020.
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.
Below transaction summaries relate to Jetters Co. as at 30th June 2019.
Cash balance as at 1of July 2019 12500
Cash receipts from the customers 720000
Purchase of land 250000
Obtained a bank loan 35000
Business cash deposits in the bank account 10000
Purchase of 2 vehicles for 20000 each
Repayment of the loan 5000
Payments to vendors 562000
Borrowings from a financial institution 45000
Sale of investment 25000
Payment of operating expenses 115000
Payment of income taxes 52000
Share capital issued 150000
Payments for interest expense 21000
Sale of machinery 61000
Sale of motor vehicle 15000
Prepare the cashflow statement for Jetters Co. for the year ended 30th June 2020.
Cash flow statement is a financial statement which tells us about the change in the cash balance from one accounting period to another. Cash flow statement also provide information about the cash generated or used up during the period. For a public limited company, publishing cash flow statement is mandatory. To prepare cash flow statement, there are two method: Indirect Method and Direct Method. In this case, we will use direct method to prepare the cash flow statement.
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