Health Plus, Inc. Income Statement Year Ended September 30, 2016 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense-Plant Assets Total Operating Expenses Net Income Before Income Taxes Income Tax Expense Net Income $ 58,000 24,000 Cash Accounts Receivable Merchandise Inventory Plant Assets Accumulated Depreciation Land Accounts Payable Accrued Liabilities Notes Payable (long-term) Common Stock, no par Retained Earnings a. Acquisition of plant assets is $120,000. Of this amount, $109,000 is paid in cash and $11,000 by signing a note payable. b. Cash receipt from sale of land totals $22,000. There was no gain or loss. $ c. Cash receipts from issuance of common stock total $34,000. d. Payment of note payable is $10,000. e. Payment of dividends is $8,000. f. From the balance sheet: 235,000 89,000 146,000 2016 $ 32,000 51,000 97,000 180,000 (58,000) 72,000 36,000 17,000 11,000 82,000 64,000 6,000 $ 58,000 40,000 270,000 September 30 2015 $ 10,000 61,000 93,000 60,000 (34,000) 94,000 21,000 27,000 10,000 6,000 220,000 Prepare Health Plus's statement of cash flows for the year ended September 30, 2016, using the indirect method. Include a separate section for non-cash investing and financing activities. Complete the statement one section at a time, beginning with the cash flows from operating activities.
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
