Cash and cash equivalents, December 31 prior year-end Cash and cash equivalents, December 31 current year-end Cash received as interest Cash paid for salaries Bonds payable retired by issuing common stock (no gain or loss on retirement) Cash paid to retire long-term notes payable Cash received from sale of equipment Land purchased by issuing long-term notes payable Cash paid for store equipment Cash dividends paid Cash paid for other expenses Cash received from customers Cash paid for inventory $ 31,000 56,172 3, 100 80,000 135,000 155,000 75,950 78, 309 20,450 18,609 40, 600 601, 400 312, 728 Use the above information about Ferran Company to prepare a complete statement of cash flows (direct method for the current ended December 31. Use a note disclosure for any noncash Investing and financing activities. Note: Amounts to be deducted should be Indicated with a minus sign.
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.
![Cash and cash equivalents, December 31 prior year-end
Cash and cash equivalents, December 31 current year-end
Cash received as interest
Cash paid for salaries
Bonds payable retired by issuing common stock (no gain or loss on retirement]
Cash paid to retire long-term notes payable
Cash received from sale of equipment!
Land purchased by issuing long-ter notes payable
Cash paid for store equipment
Cash dividends paid
eash paid for other expenses
each received from custoners
Cash paid for inventory
Use the above information about Ferron Company to prepare a complete statement of cash flows (drect method for the current ye
ended December 31. Use a note disclosure for any noncash investing and financing activeles.
Note: Amounts to be deducted should be Indicated with a minus sign.
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31
Cash flows from operating activities
Receipts from customers
Payments for salaries
Receipts of Interest
Payments for other expenses
Payments for inventory
Not cash provided by operating Ecovilcs
Cash flows from investing activities
Payment for store equipment
Receipt from sale of equipment
Not cash provided by Investing activities
Cash flows from financing activities
Payment of cash dividend
and purchased by Issuing long-term notes
payable
Payment to retire long-term notes payable
Net Increase (decrease) in cash and cash
cquivalents
Cash and cash equivalents at prior year-end
Cash and cash couivalents at cument year-end
Noncash Investing and financing activities
13
5
D
0
0
$ 31,000
56,172
3. 100
80,000
135,000
000
175,950
78, 300
20,450
18,509
40,1600
601,400
312, 728
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