Statement of financial position balances as at 31 December 20X8 and 20 x 9 are provided below for Laurel Inc. Laurel Inc. additional information: Net earnings for 20x9 were $714,000. Equipment with an original cost of $404,000 and a NBV of $ 152,000 was sold for $152,000 during the year. Long-term investments were sold for $137,000 during the year. Short-term investments acquired are treasury bills with an original term of three months. Required: Prepare an SCF for 20 x 9 using the indirect method. Note any
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.
![Statement of financial position balances as
at 31 December 20X8 and 20 x 9 are
provided below for Laurel Inc. Laurel Inc.
additional information: Net earnings for
20x9 were $714,000. Equipment with an
original cost of $404,000 and a NBV of $
152,000 was sold for $152,000 during the
year. Long-term investments were sold for
$137,000 during the year. Short-term
investments acquired are treasury bills
with an original term of three months.
Required: Prepare an SCF for 20x 9 using
the indirect method. Note any
assumptions made during your SCF
preparation. (Deductible amounts and
Cash outflows should be indicated with
minus sign.) Laurel Inc. Statement of Cash
Flows For the year ended 31 December 20
X9 \table[[\table[[Operating activities:], [
Net earninas]]],[Net earnings,
Øs, 714,000,], [Adjustments for non-cash
items:...]. [Depreciation expense,
0
254,000,]. [Amortization of patent,var
?
€, 17,000,], [Gain on sale of long-term
investment,diamond,(35,000), ], [Change in
cash,..]. [,950,000,], [Changes in net
working capital:,C,.]. [Increase in accounts
receivable,0,207,000x,], [Increase in
inventories,6, 93, 000ax, ], [Increase in
accounts payable,6), 17,000x, ], [Change in
cash,y, 667,000,], [Net cash from
operations,.,10], [Investing activities:,
E, 3518A8,], [Purchase of equipment,
0,404,000 x,], [Proceeds on sale of
equipment, 6, 152, 000,], [Proceeds on sale
of long-term investment,o, 137,0000,].[
Change in cash,,115,000,], [Net cash for
investing...,808,000],[Financing activities:...
1. [Proceeds on sale of long-term
investment,x, 116,000x, ], [Proceeds on
issuance of shares,, 87,000px, ], [Dividends
paid,0, 104,000x,]] \table[[Cla,, 500,], [Net
cash for investing..,808, 000], [Financing
activities:], [Proceeds on sale of long-term
investment,x, 116,000x,]. [Proceeds on
issuance of shares,vare, 87,000x, ], [
Dividends paid,vare, 104, 000 x,]. [Change
in cash, 99,000,], [Net cash from
financing.., 406, 000], [Change in cash,
0,,651,000x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67f7a6ca-f9fc-4aae-9eea-9a2b51983e52%2Fa2760ae2-72b9-47e0-b6e2-7ba5f07934cb%2F0mjvf9h_processed.jpeg&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
