Presented below are the financial statements of Cullumber Company. Cullumber Company Comparative Balance Sheets December 31 Assets 2022 2021 Cash $ 87,500 $ 50,000 Accounts receivable 50,000 35,000 Inventory 70,000 50,000 Property, plant, and equipment 150,000 195,000 Accumulated depreciation (80,000 ) (60,000 ) Total $277,500 $270,000 Liabilities and Stockholders’ Equity Accounts payable $ 47,500 $ 37,500 Income taxes payable 17,500 20,000 Bonds payable 42,500 82,500 Common stock 45,000 35,000 Retained earnings 125,000 95,000 Total $277,500 $270,000 Cullumber Company Income Statement For the Year Ended December 31, 2022 Sales revenue $605,000 Cost of goods sold 437,500 Gross profit 167,500 Selling expenses $45,000 Administrative expenses 15,000 60,000 Income from operations 107,500 Interest expense 7,500 Income before income taxes 100,000 Income tax expense 20,000 Net income $ 80,000 Additional data: 1. Depreciation expense was $43,750. 2. Dividends declared and paid were $50,000. 3. During the year equipment was sold for $21,250 cash. This equipment cost $45,000 originally and had accumulated depreciation of $23,750 at the time of sale. Further analysis reveals the following. 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 3. All depreciation expense is in the selling expense category. 4. All sales and purchases are on account. Question: Prepare a statement of cash flows for Cullumber Company using the direct method. If someone can please explain in detail how to get the Cash payments for operating expenses portion and how did they calculate the operating expenses. Thank you!
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.
Presented below are the financial statements of Cullumber Company. Cullumber Company Comparative
Question: Prepare a statement of
If someone can please explain in detail how to get the Cash payments for operating expenses portion and how did they calculate the operating expenses. Thank you!
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