Prepare a statement of cash flows for the Maness Coporation, using the infromation shown in the balance sheets. 2017 2018 Changes Assets Cash $150 $125 $(25) Accounts receiveable 350 375 25 Inventory 475 550 75 Total current assets 975 1,050 75 Gross fixed assets 2425 2750 325 Accumulated depreciation (1000) (1200) (200) Net fixed assets 1425 1550 125 TOTAL ASSETS 2400 2600 200 Debt (Liabilities) and Equity Debt Account payable 200 150 (50) Short-term notes 0 150 150 Total current liabilities 200 300 100 Long-term debt 600 600 (0) Total debt 800 900 100 Owners' equity Commo stock 900 900 0 Retained earnings 700 800 100 Total owners' equity 1600 1700 100 TOTAL DEBT OWNERS' EQUITY 2400 2600 200 Income Statement January 1- December 2018 Sales 1450 Cost of goods sold (850) Gross profits 600 Operating expenses (240) Operating profits 360 Interest expense (64) Profit before taxes 296 Taxes (118) Net profits 178 Net profits 178 Dividends paid (78) Increase in retained earnings 100 Prepared a statement of cash flow for the Maness Corporation, using the information shown in the balance sheets.
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.
Prepare a statement of
2017 2018 Changes
Assets
Cash $150 $125 $(25)
Inventory 475 550 75
Total current assets 975 1,050 75
Gross fixed assets 2425 2750 325
Net fixed assets 1425 1550 125
TOTAL ASSETS 2400 2600 200
Debt (Liabilities) and Equity Debt
Account payable 200 150 (50)
Short-term notes 0 150 150
Total current liabilities 200 300 100
Long-term debt 600 600 (0)
Total debt 800 900 100
Owners' equity
Commo stock 900 900 0
Total owners' equity 1600 1700 100
TOTAL DEBT OWNERS' EQUITY 2400 2600 200
Income Statement January 1- December 2018
Sales 1450
Cost of goods sold (850)
Gross profits 600
Operating expenses (240)
Operating profits 360
Interest expense (64)
Profit before taxes 296
Taxes (118)
Net profits 178
Net profits 178
Dividends paid (78)
Increase in retained earnings 100
Prepared a statement of cash flow for the Maness Corporation, using the information shown in the balance sheets.
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
