Prepare the FIRST (Operating) and the SECOND (Investing) sections of the statement of cash flows for the year ended December 31, 2021
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.
![السؤال 4
:.The following comparative balance sheet is given for Estern Co
Dec 31, 2020
Dec.31. 2021
Assets
Cash
$19,500
$117,000
21,000
24,000
40,500
27,000
Notes Receivable
Supplies & Inventory
Prepaid expense
18,000
10,500
27,000
0
Long-term investments
48,000
55,500
Machines and tools
(15,000)
(21,000) Accumulated depreciation-equipment
$213.000
$159,000
Total Assets
Liabilities & Stockholders' Equity
10,500 $
25,500 S
Accounts payable
70.500
55.500
Bonds payable (long-term)
34.500
60.000
Common Stock
43,500
72.000
Retained Earnings
$159,000
213,000 S
Total Liabilities & Stockholders'
Equity
:Income Statement Information (2021)
.Net income for the year ending December 31, 2021 is $43.500.1
Depreciation expense is 56,000 .2
.There is a loss of $3,000 resulted from the sale of long-term investment .3
:Additional information (2021)
All sales and purchases of inventory are on account (or credit).1
.Received cash for the sale of long-term investments that had a cost of $27.000, yielding a $3,000 loss.2
.Cash dividends paid is $15,000.3
.The company purchased new machines and tools for $7.500 cash.4
:Required
Prepare the FIRST (Operating) and the SECOND (Investing) sections of the statement of cash flows for the year ended December 31, 2021
(PLEASE PROVIDE EACH AMOUNTATEM IN A SEPARATE LINE)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb64a6248-265b-41ad-b5e5-eaad729e1ce5%2F6a00d375-cdbd-468a-b894-f6e8ac57f2e4%2Fkn1uvhg_processed.jpeg&w=3840&q=75)
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