The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Assets Cash $ 866,790 $ 932,340 Accounts receivable (net) 788,780 719,440 Inventories 1,196,170 1,100,820 Prepaid expenses 27,740 32,940 Land 298,180 450,730 Buildings 1,378,200 849,450 Accumulated depreciation-buildings (390,060) (364,050) Equipment 485,400 429,060 Accumulated depreciation-equipment (133,490) (149,950) Total assets $4,517,710 $4,000,780 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $ 858,360 $ 905,800 Bonds payable 252,990 0 Common stock, $20 par 298,000 110,000 Paid-in capital: Excess of issue price over par-common stock 715,000 527,000 Retained earnings 2,393,360 2,457,980 Total liabilities and stockholders’ equity $4,517,710 $4,000,780 The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 20Y2 are as follows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 450,730 Apr. 20 Realized $141,900 cash from sale 152,550 298,180 ACCOUNT Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 849,450 Apr. 20 Acquired for cash 528,750 1,378,200 ACCOUNT Accumulated Depreciation-Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 364,050 Dec. 31 Depreciation for year 26,010 390,060 ACCOUNT Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 429,060 Jan. 26 Discarded, no salvage 47,200 381,860 Aug. 11 Purchased for cash 103,540 485,400 ACCOUNT Accumulated Depreciation-Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 149,950 Jan. 26 Equipment discarded 47,200 102,750 Dec. 31 Depreciation for year 30,740 133,490 ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 May 1 Issued 20-year bonds 252,990 252,990 ACCOUNT Common Stock, $20 par ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 110,000 Dec. 7 Issued 9,400 shares of common stock for $40 per share 188,000 298,000 ACCOUNT Paid-in Capital in Excess of Par-Common Stock ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 527,000 Dec. 7 Issued 9,400 shares of common stock for $40 per share 188,000 715,000 ACCOUNT Retained Earnings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 2,457,980 Dec. 31 Net loss 31,110 2,426,870 Dec. 31 Cash dividends 33,510 2,393,360 Required: Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Whitman Co.Statement of Cash FlowsFor the Year Ended December 31, 20Y2 Cash flows from operating activities: blank $- Select - Adjustments to reconcile net loss to net cash flow from operating activities: - Select - - Select - Changes in current operating assets and liabilities: blank - Select - - Select - - Select - - Select - Net cash flow used for operating activities blank $fill in the blank 15 Cash flows from (used for) investing activities: blank $- Select - - Select - - Select - Net cash flow used for investing activities blank fill in the blank 22 Cash flows from (used for) financing activities: blank $- Select - - Select - - Select - Net cash flow from financing activities blank fill in the blank 29 blank $- Select - Cash at the beginning of the year blank fill in the blank 32 Cash at the end of the year blank $fill in the blank 33
The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows: Dec. 31, 20Y2 Dec. 31, 20Y1 Assets Cash $ 866,790 $ 932,340 Accounts receivable (net) 788,780 719,440 Inventories 1,196,170 1,100,820 Prepaid expenses 27,740 32,940 Land 298,180 450,730 Buildings 1,378,200 849,450 Accumulated depreciation-buildings (390,060) (364,050) Equipment 485,400 429,060 Accumulated depreciation-equipment (133,490) (149,950) Total assets $4,517,710 $4,000,780 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $ 858,360 $ 905,800 Bonds payable 252,990 0 Common stock, $20 par 298,000 110,000 Paid-in capital: Excess of issue price over par-common stock 715,000 527,000 Retained earnings 2,393,360 2,457,980 Total liabilities and stockholders’ equity $4,517,710 $4,000,780 The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 20Y2 are as follows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 450,730 Apr. 20 Realized $141,900 cash from sale 152,550 298,180 ACCOUNT Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 849,450 Apr. 20 Acquired for cash 528,750 1,378,200 ACCOUNT Accumulated Depreciation-Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 364,050 Dec. 31 Depreciation for year 26,010 390,060 ACCOUNT Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 429,060 Jan. 26 Discarded, no salvage 47,200 381,860 Aug. 11 Purchased for cash 103,540 485,400 ACCOUNT Accumulated Depreciation-Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 149,950 Jan. 26 Equipment discarded 47,200 102,750 Dec. 31 Depreciation for year 30,740 133,490 ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 May 1 Issued 20-year bonds 252,990 252,990 ACCOUNT Common Stock, $20 par ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 110,000 Dec. 7 Issued 9,400 shares of common stock for $40 per share 188,000 298,000 ACCOUNT Paid-in Capital in Excess of Par-Common Stock ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 527,000 Dec. 7 Issued 9,400 shares of common stock for $40 per share 188,000 715,000 ACCOUNT Retained Earnings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 2,457,980 Dec. 31 Net loss 31,110 2,426,870 Dec. 31 Cash dividends 33,510 2,393,360 Required: Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Whitman Co.Statement of Cash FlowsFor the Year Ended December 31, 20Y2 Cash flows from operating activities: blank $- Select - Adjustments to reconcile net loss to net cash flow from operating activities: - Select - - Select - Changes in current operating assets and liabilities: blank - Select - - Select - - Select - - Select - Net cash flow used for operating activities blank $fill in the blank 15 Cash flows from (used for) investing activities: blank $- Select - - Select - - Select - Net cash flow used for investing activities blank fill in the blank 22 Cash flows from (used for) financing activities: blank $- Select - - Select - - Select - Net cash flow from financing activities blank fill in the blank 29 blank $- Select - Cash at the beginning of the year blank fill in the blank 32 Cash at the end of the year blank $fill in the blank 33
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
The comparative
| Dec. 31, 20Y2 | Dec. 31, 20Y1 | ||||
| Assets | |||||
| Cash | $ 866,790 | $ 932,340 | |||
| 788,780 | 719,440 | ||||
| Inventories | 1,196,170 | 1,100,820 | |||
| Prepaid expenses | 27,740 | 32,940 | |||
| Land | 298,180 | 450,730 | |||
| Buildings | 1,378,200 | 849,450 | |||
| (390,060) | (364,050) | ||||
| Equipment | 485,400 | 429,060 | |||
| Accumulated depreciation-equipment | (133,490) | (149,950) | |||
| Total assets | $4,517,710 | $4,000,780 | |||
| Liabilities and |
|||||
| Accounts payable (merchandise creditors) | $ 858,360 | $ 905,800 | |||
| Bonds payable | 252,990 | 0 | |||
| Common stock, $20 par | 298,000 | 110,000 | |||
| Paid-in capital: Excess of issue price over par-common stock | 715,000 | 527,000 | |||
| 2,393,360 | 2,457,980 | ||||
| Total liabilities and stockholders’ equity | $4,517,710 | $4,000,780 |
The noncurrent asset, noncurrent liability, and stockholders' equity accounts for 20Y2 are as follows:
| ACCOUNT Land | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 450,730 | |||
| Apr. 20 | Realized $141,900 cash from sale | 152,550 | 298,180 |
| ACCOUNT Buildings | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 849,450 | |||
| Apr. 20 | Acquired for cash | 528,750 | 1,378,200 |
| ACCOUNT Accumulated Depreciation-Buildings | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 364,050 | |||
| Dec. 31 | Depreciation for year | 26,010 | 390,060 |
| ACCOUNT Equipment | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 429,060 | |||
| Jan. 26 | Discarded, no salvage | 47,200 | 381,860 | ||
| Aug. 11 | Purchased for cash | 103,540 | 485,400 |
| ACCOUNT Accumulated Depreciation-Equipment | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 149,950 | |||
| Jan. 26 | Equipment discarded | 47,200 | 102,750 | ||
| Dec. 31 | Depreciation for year | 30,740 | 133,490 |
| ACCOUNT Bonds Payable | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| May 1 | Issued 20-year bonds | 252,990 | 252,990 |
| ACCOUNT Common Stock, $20 par | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 110,000 | |||
| Dec. 7 | Issued 9,400 shares of common stock for $40 per share |
188,000 | 298,000 |
| ACCOUNT Paid-in Capital in Excess of Par-Common Stock | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 527,000 | |||
| Dec. 7 | Issued 9,400 shares of common stock for $40 per share |
188,000 | 715,000 |
| ACCOUNT Retained Earnings | ACCOUNT NO. | ||||
| Balance | |||||
| Date | Item | Debit | Credit | Debit | Credit |
| 20Y2 | |||||
| Jan. 1 | Balance | 2,457,980 | |||
| Dec. 31 | Net loss | 31,110 | 2,426,870 | ||
| Dec. 31 | Cash dividends | 33,510 | 2,393,360 |
Required:
Prepare a statement of
Whitman Co.Statement of Cash FlowsFor the Year Ended December 31, 20Y2
| Cash flows from operating activities: | blank | |
|
|
$- Select - | |
| Adjustments to reconcile net loss to net cash flow from operating activities: | ||
|
|
- Select - | |
|
|
- Select - | |
| Changes in current operating assets and liabilities: | blank | |
|
|
- Select - | |
|
|
- Select - | |
|
|
- Select - | |
|
|
- Select - | |
| Net cash flow used for operating activities | blank | $fill in the blank 15 |
| Cash flows from (used for) investing activities: | blank | |
|
|
$- Select - | |
|
|
- Select - | |
|
|
- Select - | |
| Net cash flow used for investing activities | blank | fill in the blank 22 |
| Cash flows from (used for) financing activities: | blank | |
|
|
$- Select - | |
|
|
- Select - | |
|
|
- Select - | |
| Net cash flow from financing activities | blank | fill in the blank 29 |
|
|
blank | $- Select - |
| Cash at the beginning of the year | blank | fill in the blank 32 |
| Cash at the end of the year | blank | $fill in the blank 33 |
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