Paddleboard Inc. began operations on January 1, 2019. Its post-closing trial balance at December 31, 2019 and 2020, is shown below along with some other information. Revenues: Sales Cost of goods sold Gross Profit Expenses: Paddleboard Inc. Income Statement For Year Ended December 31, 2020 (000s) Other expenses Depreciation expense. Total operating expenses Profit from operations Income tax expense Profit Account Cash Paddleboard Inc. Post-Closing Trial Balance (000s) Receivables Merchandise inventory Property, plant and equipment Accumulated depreciation Investments Accounts payable Accrued liabilities. $ 720 190 Bonds payable Common shares Botined cappingr $ 3,764 1,826 1,938 910 1,028 238 $ 798 December 31 2020 2019 $2,680 $1,820 2,060 3,020 2,700 1,710 2,220 1,420 560 2,788 2,540 3,020 1,900 2,060 1,900 320 2,040 3,020 2 000 2,380 2,610 2 140
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.
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![Paddleboard Inc. began operations on January 1, 2019. Its post-closing trial balance at December 31, 2019 and 2020, is shown below
along with some other information.
Revenues:
Sales
Cost of goods sold
Gross Profit
Expenses:
Paddleboard Inc.
Income Statement
For Year Ended December 31, 2020
(000s)
Other expenses
Depreciation expense
Total operating expenses
Profit from operations
Income tax expense
Profit
Account
Cash
Paddleboard Inc.
Post-Closing Trial Balance
(000s)
Receivables
Merchandise inventory
Property, plant and equipment
Accumulated depreciation
Investments
Accounts payable
Accrued liabilities
$ 720
190
Bonds payable
Common shares
Retained earnings
$ 3,764
1,826
1,938
910
1,028
238
$ 798
December 31
2020
2019
$2,680 $1,820
2,788
2,060
2,540
3,020
3,020 2,700
1,900
2,060
1,900
320
2,040
3,020
3,900
1,710
2,220
1,420
560
2,380
2,610
3,140](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F567e5c76-a71a-4e3b-b67f-acaa9766611e%2Fb673035e-c30e-4c78-ac50-7cac5771bb77%2Fc8fouss_processed.jpeg&w=3840&q=75)
![Other information regarding Paddleboard Inc. and its activities during 2020:
1. Assume all accounts have normal balances.
2. Cash dividends were declared and paid during the year.
3. There were no sales of property, plant, and equipment assets during the year.
4. Investments were sold for cash at their original cost.
Required:
Using the information provided, prepare a statement of cash flows (applying the indirect method) for the year ended December 31,
2020. (List any deduction in cash and cash outflows as negative amounts. Enter amounts in thousands, not in dollar.)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash inflows from operating activities:
Cash flows from investing activities:
Cash flows from investing activities:
PADDLEBOARD INC.
Statement of Cash Flows
For Year Ended December 31, 2020
(000s)
Cash flows from financing activities:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F567e5c76-a71a-4e3b-b67f-acaa9766611e%2Fb673035e-c30e-4c78-ac50-7cac5771bb77%2Fcbtj8rw_processed.jpeg&w=3840&q=75)
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