Swifty Inc. had the following statement of financial position at the end of operations for 2022: Cash Accounts receivable FV-NI investments Equipment (net) Land Swifty Inc. Statement of Financial Position December 31, 2022 $25,120 Accounts payable Bonds payable Common shares Retained earnings (a) 26,320 32,000 86,120 45,120 $214,680 During 2023, the following occurred: $35,120 46,120 105,120 28,320 $214,680 1. Swifty liquidated its FV-NI investments portfolio at a loss of $10,120. 2. A parcel of land was purchased for $43,120. 3. An additional $30,000 worth of common shares was issued. 4. Dividends totalling $15,120 were declared and paid to shareholders. 5. Net income for 2023 was $40,120, including $17,120 in depreciation expense. 6. Land was purchased through the issuance of $35,120 in additional bonds. 7. At December 31, 2023, Cash was $75,320; Accounts Receivable was $47,120; and Accounts Payable was $45,120. Prepare the statement of financial position as it would appear at December 31, 2023. (List Assets in order of liquidity.)
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.
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