The Comparative balance sheet of ASAD LIMITED for June 30, 2018 and June 30, 2017 is as follows: Assets June 30, 2018 June 30, 2017 Cash Rs.93,400 Rs. 57,800 Account Receivable (Net) 125,000 123,500 Inventories 146,500 108,900 Investment -- 65,000 Land 145,000 ---- Equipment 367,600 278,600 Accumulated Depreciation (110,900) (87,400) Equities Accounts Payable Rs. 82,400 Rs. 74,000 Accrued Expenses 6,700 6,000 Dividend Payable 18,400 15,700 Ordinary Shares Capital Rs. 10 100,000 70,000 Ordinary Shares Premium 320,000 200,000 Retained Earning 239,100 180,700 The following additional information has been taken from the records of ASAD LIMITED Equipment and Land acquired for cash The investments were sold for Rs. 95,00 cash The ordinary shares were issued for cash Net Income Rs. 32,000 Cash Dividend Declared Rs. 73,600 Required:Prepare a Statement of Cash Flow for the year ended June 30, 2018
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.
The Comparative
|
Assets |
June 30, 2018 |
June 30, 2017 |
|
Cash |
Rs.93,400 |
Rs. 57,800 |
|
|
125,000 |
123,500 |
|
Inventories |
146,500 |
108,900 |
|
Investment |
-- |
65,000 |
|
Land |
145,000 |
---- |
|
Equipment |
367,600 |
278,600 |
|
|
(110,900) |
(87,400) |
|
Equities |
|
|
|
Accounts Payable |
Rs. 82,400 |
Rs. 74,000 |
|
Accrued Expenses |
6,700 |
6,000 |
|
Dividend Payable |
18,400 |
15,700 |
|
Ordinary Shares Capital Rs. 10 |
100,000 |
70,000 |
|
Ordinary Shares Premium |
320,000 |
200,000 |
|
|
239,100 |
180,700 |
The following additional information has been taken from the records of ASAD LIMITED
- Equipment and Land acquired for cash
- The investments were sold for Rs. 95,00 cash
- The ordinary shares were issued for cash
- Net Income Rs. 32,000
- Cash Dividend Declared Rs. 73,600
Required:Prepare a Statement of
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