CANYON CANOE COMPANY Comparative Balance Sheet December 31, 2018 and 2019 2019 2018 Assets Current Assets: Cash $ 523,693 $ 12,125 Short-term Investments, net 23,840 Accounts Receivable, net 2,422 7,600 Merchandise Inventory 355 Office Supplies 60 165 Prepaid Rent Property, Plant, and Equipment 2,000 Land 155,000 85,000 Building 610,000 35,000 Canoes 12,000 12,000 Office Furniture and Equipment 150,000 Accumulated Depreciation-PP&E (35,180) $ 1,442,190 (850) $ 153,040 Total Assets Liabilities Current Liabilities: Accounts Payable 5,195 3,050 Utilities Payable Telephone Payable Wages Payable Notes Payable Interest Payable 745 295 700 325 4,250 1,250 15,000 350 50 Unearned Revenue 500 350 Long-term Liabilities: Notes Payable Mortgage Payable Bonds Payable Discount on Bonds Payable Total Liabilities 7,200 405,000 7,200 210,000 (1,270) 647,670 12,520 Stockholders' Equity Paid-In Capital: Preferred Stock 60,000 Paid-In Capital in Excess of Par-Preferred 10,000 Common Stock 186,000 136,000 Paid-In Capital in Excess of Par-Common Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 150,000 388,520 4,520 794,520 140,520 $ 1,442,190 $ 153,040
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.
Preparing the statement of
This problem continues the Canyon Canoe Company situation from Chapter 13.Canyon Canoe Company’s comparative
Additional data follow:
- The income statement for 2019 included the following items:
a. Net income, $417,000.
b.
c. Amortization on the bonds payable, $254.
2. There were no disposals of property, plant and equipment during the year. All acquisitions of PP&E were for cash except the land, which was acquired by issuing
3. The company issued bonds payable with a face value of $210,000, receiving cash of $208,476.
4. The company distributed 4,000 shares of common stock in a stock dividend when the market value was $4.50 per share. All other dividends were paid in cash.
5. The common stock, except for the stock dividend, was issued for cash.
6 The cash receipt from the notes payable in 2019 is considered a financing activity because it does not relate to operations.
Requirement
Prepare the statement of cash flows for the year ended December 31, 2019, using the indirect method.
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