Financial statements for the Genatron Manufacturing Corporation for the years 2020 and 2019 are shown. Genatron Manufacturing Corporation Balance Sheet 2020 2019 ASSETS Cash $41,847 $50,643 Accts. receivable 261,201 201,804 Inventory 504,430 450,954 Total current assets 807,478 703,401 Fixed assets, net 400,000 300,000 Total assets $1,207,478 $1,003,401 LIABILITIES AND EQUITY Accts. payable $170,208 $134,265 Bank loan 91,242 91,242 Accruals 70,000 50,000 Total current liabilities 331,450 275,507 Long-term debt, 12% 392,625 293,723 Common stock, $10 par 300,000 300,000 Capital surplus 48,173 48,173 Retained earnings 135,230 85,998 Total liabilities & equity $1,207,478 $1,003,401
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.
| Genatron Manufacturing Corporation Balance Sheet |
|||||
| 2020 | 2019 | ||||
| ASSETS | |||||
|
Cash |
$41,847 |
$50,643 |
|||
|
Accts. receivable |
261,201 |
201,804 |
|||
|
Inventory |
504,430 |
450,954 |
|||
|
Total current assets |
807,478 |
703,401 |
|||
|
Fixed assets, net |
400,000 |
300,000 |
|||
|
Total assets |
$1,207,478 |
$1,003,401 |
|||
| LIABILITIES AND EQUITY | |||||
|
Accts. payable |
$170,208 |
$134,265 |
|||
|
Bank loan |
91,242 |
91,242 |
|||
|
Accruals |
70,000 |
50,000 |
|||
|
Total current liabilities |
331,450 |
275,507 |
|||
|
Long-term debt, 12% |
392,625 |
293,723 |
|||
|
Common stock, $10 par |
300,000 |
300,000 |
|||
|
Capital surplus |
48,173 |
48,173 |
|||
|
|
135,230 |
85,998 |
|||
|
Total liabilities & equity |
$1,207,478 |
$1,003,401 |
| Genatron Manufacturing Corporation Income Statement |
|||||
| 2020 | 2019 | ||||
| Net sales | $1,640,537 | $1,440,537 | |||
| Cost of goods sold | 984,322 | 864,322 | |||
| Gross profit | 656,215 | 576,215 | |||
| Expenses: | |||||
| General and administrative | 150,000 | 150,000 | |||
| Marketing | 150,000 | 130,000 | |||
| 50,215 | 40,426 | ||||
| Interest | 56,046 | 44,758 | |||
| Earnings before taxes | 249,954 | 211,031 | |||
| Income taxes | 73,156 | 61,827 | |||
| Net income | $176,798 | $149,204 |
(a)
| 2020 | 2019 | |||
| Net working capital | $ | $ |
(B) Calculate the
| 2020 | 2019 | |||
| Current ratio | ||||
| Acid-test ratio |
(c)
| 2020 | 2019 | |||||
| Average collection period | days | days | ||||
| Inventory turnover ratio |
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