FOX COMPANY Balance Sheets Dec. 31, 2017 Dec. 31, 2016 Assets Cash $ 22,000 $ 10,000 Accounts receivable 82,000 64,000 Inventory 180,000 120,000 14,000 390,000 Prepaid insurance 10,000 500,000 (136,000) $658,000 Plant assets Accumulated depreciation (102,000) Total assets $496,000 Liabilities and Stockholders' Equity Accounts payable $ 14,000 $ 20,000 Wages payable Income tax payable 18,000 12,000 14,000 16,000 Bonds payable 260,000 150,000 180,000 118,000 Common stock 180,000 Retained earnings 172,000 Total liabilities and equity $658.000 $496.000 Cash dividends of $58,000 were declared and paid during 2017. Also in 2017, plant assets were purchased for cash, and bonds payable were issued for cash. Bond interest is paid semiannually on June 30 and December 31. Accounts payable relate to merchandise purchases. Compute the net cash flow from financing activities for 2017. a. $ 110,000 b. ($ 58,000) ($110,000) $ 52,000 C. d.
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.
Fox Company’s income statement and comparative balance sheets follow.
Cash dividends of $58,000 were declared and paid during 2017. Also in 2017, plant assets were purchased for cash, and bonds payable were issued for cash. Bond interest is paid semiannually on June 30 and December 31. Accounts payable relate to merchandise purchases.
Compute the net
a. $ 110,000
b. ($ 58,000)
c. ($110,000)
d. $ 52,000
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