KLM Co. had the following information in 2020: Issuance of common stock 32000 Payment of dividends Bank loan repaid Purchase of equipment Issuance of bonds payable Sale of long Term Assets Decrease in Accounts receivable Purchase of short term investment Increase of prepaid expenses Purchase of land Net Profit 15000 21000 55000 29000 24000 17000 12000 15000 50000 37800 Depreciation Amortization 18500 9500 Prepare cash flows statement, use indirect method for operating cash flow.
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.
![Question 3:
KLM Co. had the following information in 2020:
Issuance of common stock
32000
Payment of dividends
Bank loan repaid
Purchase of equipment
Issuance of bonds payable
Sale of long Term Assets
15000
21000
55000
29000
24000
Decrease in Accounts receivable
17000
Purchase of short term investment
12000
Increase of prepaid expenses
15000
Purchase of land
50000
Net Profit
37800
Depreciation
Amortization
18500
9500
Prepare cash flows statement, use indirect method for operating cash flow.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4212043c-2c05-400d-88d5-7869d18a4383%2F9ddbf121-b546-4209-a646-e3e9ad07f1b7%2Ff883ipi_processed.jpeg&w=3840&q=75)
![Question 4:
XYZ Co. had the following information in 2020:
Sales
150000
COGS
80000
Operating expenses (excluding depreciation)
Interest expense
32000
8000
Таxes
3000
Increase in Accounts receivable
7000
Decrease in inventory
Increase in Accounts payable
Decrease in other payables
Increase in interest payable
Decrease in tax payable
4000
5000
3500
2000
1000
Prepare operating cash flows using direct method.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4212043c-2c05-400d-88d5-7869d18a4383%2F9ddbf121-b546-4209-a646-e3e9ad07f1b7%2Fc5zxz8_processed.jpeg&w=3840&q=75)
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