sh flow erating 59,600) Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from op- erating activities. PR 13-3A Statement of cash flows-indirect method The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows: Obj. 2, 3, 4, 5 Dec. 31, 20Y2 Dec. 31, 20Y1 Assets Cash $ 964,800 Accounts receivable (net) $ 918,000 828,900 761,940 Inventories 1,268,460 1,162,980 Prepaid expenses 29,340 35,100 Land 315,900 479,700 Buildings 1,462,500 900,900 Accumulated depreciation-buildings. (408,600) (382,320) Equipment... 512,280 454,680 Accumulated depreciation-equipment Total assets (141,300) (158,760) $4,785,480 $4,219,020 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $ 922,500 $ 958,320 Bonds payable 270,000 0 Common stock, $25 par.... 317,000 117,000 Paid-in capital in excess of par-common stock 758,000 558,000 Retained earnings.. 2,517,980 2,585,700 Total liabilities and stockholders' equity. $4,785,480 $4,219,020 The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 20Y2 are as follows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit 20Y2 Jan. 479,700 1 Balance Apr. 20 Realized $151,200 cash from sale 163,800 315,900 ACCOUNT NO. ACCOUNT Buildings Balance Credit Debit Date 900,900 1,462,500 2012 Jan. Apr. Item 1 Balance 20 Acquired for cash Debit 561,600 Credit Credit
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
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| date | Items | debit | credit | debit | credit |
| Jan 1 | Balance | 2,585,700 | |||
| dec 31 | net loss | 35,320 | 2,550,380 | ||
| dec 31 | cash dividends | 32,400 | 2,517,980 |
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