Taser Corporation’s recent comparative balance sheet and income statement follow. Balance Sheets, December 31 2019 2020 Assets Cash and cash equivalents $35,100 $57,420 Accounts receivable (net) 61,200 61,200 Merchandise inventory 140,400 153,000 Investments, long-term 18,000 Plant assets 303,300 324,900 Accumulated depreciation (79,200) (61,200) Total assets $460,800 $553,320 Liabilities and Stockholders’ Equity Accounts payable $37,800 $34,200 Salaries payable 2,700 900 Income taxes payable 3,600 6,300 Bonds payable 180,000 180,000 Premium on bonds payable 7,200 6,660 Common stock, no-par 216,000 279,900 Retained earnings 13,500 45,360 Total liabilities andstockholders’ equity $460,800 $553,320 Income Statement, For Year Ended December 31 2020 Sales revenue $216,000 Cost of goods sold (86,400) Depreciation expense (10,800) Salaries expense (39,600) Income tax expense (18,000) Interest expense (12,600) Other expenses (4,140) Gain on sale of plant assets 5,400 Net income $49,860 Additional information 1. Purchased a plant asset, $54,000; issued capital stock in full payment. 2. Purchased a long-term investment in equity securities accounted for cash, $18,000. 3. Declared and paid a cash dividend, $18,000. 4. Sold plant asset for $9,000 cash (cost, $32,400; accumulated depreciation, $28,800). 5. Sold capital stock, 900 shares at $11 per share cash. Required Cash Flow Worksheet Cash Flow Reconciliation b. Prepare a reconciliation of the total of the three sections of net cash flows from operating, investing, and financing activities to the change in cash and prepare the noncash disclosure note. Cash Flow Reconciliation Amount Net cash provided (used) by operating activities Answer Net cash provided (used) by investing activities Answer Net cash provided (used) by financing activities Answer Net change in cash and cash equivalents Answer Cash and cash equivalents, January 1, 2020 Answer Cash and cash equivalents, December 31, 2020 Answer Noncash Transaction Amount AnswerAmortization of bond premiumDividends paidExtinguishment of bonds payableIncrease in retained earningsProceeds from sale of plant assetsPurchase of plant assetsPurchase of plant assets with stock
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.
Taser Corporation’s recent comparative
| Balance Sheets, December 31 | 2019 | 2020 |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | $35,100 | $57,420 |
| Accounts receivable (net) | 61,200 | 61,200 |
| Merchandise inventory | 140,400 | 153,000 |
| Investments, long-term | 18,000 | |
| Plant assets | 303,300 | 324,900 |
| (79,200) | (61,200) | |
| Total assets | $460,800 | $553,320 |
| Liabilities and |
||
| Accounts payable | $37,800 | $34,200 |
| Salaries payable | 2,700 | 900 |
| Income taxes payable | 3,600 | 6,300 |
| Bonds payable | 180,000 | 180,000 |
| Premium on bonds payable | 7,200 | 6,660 |
| Common stock, no-par | 216,000 | 279,900 |
| 13,500 | 45,360 | |
| Total liabilities andstockholders’ equity | $460,800 | $553,320 |
| Income Statement, For Year Ended December 31 |
2020 |
|---|---|
| Sales revenue | $216,000 |
| Cost of goods sold | (86,400) |
| Depreciation expense | (10,800) |
| Salaries expense | (39,600) |
| Income tax expense | (18,000) |
| Interest expense | (12,600) |
| Other expenses | (4,140) |
| Gain on sale of plant assets | 5,400 |
| Net income | $49,860 |
Additional information
1. Purchased a plant asset, $54,000; issued capital stock in full payment.
2. Purchased a long-term investment in equity securities accounted for cash, $18,000.
3. Declared and paid a cash dividend, $18,000.
4. Sold plant asset for $9,000 cash (cost, $32,400; accumulated depreciation, $28,800).
5. Sold capital stock, 900 shares at $11 per share cash.
Required
- Cash Flow Worksheet
- Cash Flow Reconciliation
b. Prepare a reconciliation of the total of the three sections of net cash flows from operating, investing, and financing activities to the change in cash and prepare the noncash disclosure note.
| Cash Flow Reconciliation | Amount |
|---|---|
| Net cash provided (used) by operating activities | Answer
|
| Net cash provided (used) by investing activities | Answer
|
| Net cash provided (used) by financing activities | Answer
|
| Net change in cash and cash equivalents | Answer
|
| Cash and cash equivalents, January 1, 2020 | Answer
|
| Cash and cash equivalents, December 31, 2020 | Answer
|
| Noncash Transaction | Amount |
|---|---|
| AnswerAmortization of bond premiumDividends paidExtinguishment of bonds payableIncrease in retained earningsProceeds from sale of plant assetsPurchase of plant assetsPurchase of plant assets with stock
|
Answer
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