Presented below is the 2024 income statement and comparative balance sheet information for Tiger Enterprises. TIGER ENTERPRISES Income Statement For the Year Ended December 31, 2024 ($ in thousands) Sales revenue $ 8,020 Operating expenses: Cost of goods sold $ 3,530 Depreciation expense 410 Insurance expense 270 General and administrative expense 1,970 Total operating expenses 6,180 Income before income taxes 1,840 Income tax expense (770) Net income $ 1,070 Balance Sheet Information ($ in thousands) December 31, 2024 December 31, 2023 Assets: Cash $ 470 $ 370 Accounts receivable 920 1,000 Inventory 810 770 Prepaid insurance 135 105 Equipment 2,950 2,650 Less: Accumulated depreciation (1,180) (770) Total assets $ 4,105 $ 4,125 Liabilities and Shareholders' Equity: Accounts payable $ 470 $ 530 Accrued liabilities (for general & administrative expense) 470 570 Income taxes payable 370 320 Notes payable (due 12/31/2025) 970 770 Common stock 1,070 970 Retained earnings 755 965 Total liabilities and shareholders' equity $ 4,105 $ 4,125 Required: Prepare the cash flows from operating activities section of Tiger's 2024 statement of cash flows using the direct method. Assume that all purchases and sales of inventory are on account, and that there are no anticipated bad debts for accounts receivable.
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 is the 2024 income statement and comparative
| TIGER ENTERPRISES | ||
| Income Statement | ||
| For the Year Ended December 31, 2024 | ||
| ($ in thousands) | ||
| Sales revenue | $ 8,020 | |
|---|---|---|
| Operating expenses: | ||
| Cost of goods sold | $ 3,530 | |
| 410 | ||
| Insurance expense | 270 | |
| General and administrative expense | 1,970 | |
| Total operating expenses | 6,180 | |
| Income before income taxes | 1,840 | |
| Income tax expense | (770) | |
| Net income | $ 1,070 | |
| Balance Sheet Information ($ in thousands) | December 31, 2024 | December 31, 2023 |
| Assets: | ||
| Cash | $ 470 | $ 370 |
| 920 | 1,000 | |
| Inventory | 810 | 770 |
| Prepaid insurance | 135 | 105 |
| Equipment | 2,950 | 2,650 |
| Less: |
(1,180) | (770) |
| Total assets | $ 4,105 | $ 4,125 |
| Liabilities and Shareholders' Equity: | ||
| Accounts payable | $ 470 | $ 530 |
| Accrued liabilities (for general & administrative expense) | 470 | 570 |
| Income taxes payable | 370 | 320 |
| Notes payable (due 12/31/2025) | 970 | 770 |
| Common stock | 1,070 | 970 |
| 755 | 965 | |
| Total liabilities and shareholders' equity | $ 4,105 | $ 4,125 |
Required:
Prepare the
Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.
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