The comparative balance sheets for Crane Company as of December 31 are presented below. Crane Company Comparative Balance Sheets December 31 Assets 2022 2021 Cash $ 54,400 $ 36,000 Accounts receivable 40,000 46,400 Inventory 121,160 113,600 Prepaid expenses 12,224 16,800 Land 116,000 104,000 Buildings 160,000 160,000 Accumulated depreciation—buildings (48,000 ) (32,000 ) Equipment 180,000 124,000 Accumulated depreciation—equipment (36,000 ) (28,000 ) Total $599,784 $540,800 Liabilities and Stockholders’ Equity Accounts payable $ 35,784 $ 28,800 Bonds payable 240,000 240,000 Common stock, $1 par 160,000 128,000 Retained earnings 164,000 144,000 Total $599,784 $540,800 Additional information: 1. Operating expenses include depreciation expense of $33,600 ($16,000 of depreciation expense for buildings and $17,600 for equipment). 2. Land was sold for cash at book value. 3. Cash dividends of $9,600 were paid. 4. Net income for 2022 was $29,600. 5. Equipment was purchased for $73,600 cash. In addition, equipment costing $7,600 with a book value of $8,000 was sold for $6,400 cash. 6. 32,000 shares of $1 par value common stock were issued in exchange for land with a fair value of $32,000. Prepare a statement of cash flows for the year ended December 31, 2022, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Crane Company Statement of Cash Flows Choose the accounting period Select an opening name for section one Select an item $Enter a dollar amount Adjustments to reconcile net income to Selet an opening subsection name Select an item $Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Enter a total amount for this subsection Select a closing name for section one Enter a total amount for section one Select an opening name for section two Select an item Enter a dollar amount Select an item Enter a dollar amount Select an item Enter a dollar amount Select a closing name for section two Enter a total amount for section two Select an opening name for section three Select an item Enter a total amount for section three Select an item Enter a total amount for three sections Select an item Enter a dollar amount Select a closing name for three sections $Enter a total of the two previous amounts Select an opening name for section four Select an item $Enter a dollar amount
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
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Crane Company
Comparative Balance Sheets December 31 |
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|---|---|---|---|---|---|---|
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Assets
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2022
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2021
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Cash
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$ 54,400
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$ 36,000
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40,000
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46,400
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Inventory
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121,160
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113,600
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Prepaid expenses
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12,224
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16,800
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Land
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116,000
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104,000
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Buildings
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160,000
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160,000
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(48,000
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)
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(32,000
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)
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Equipment
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180,000
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124,000
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Accumulated depreciation—equipment
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(36,000
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)
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(28,000
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)
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Total
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$599,784
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$540,800
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Liabilities and
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Accounts payable
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$ 35,784
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$ 28,800
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Bonds payable
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240,000
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240,000
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Common stock, $1 par
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160,000
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128,000
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164,000
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144,000
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Total
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$599,784
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$540,800
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Additional information:
| 1. | Operating expenses include depreciation expense of $33,600 ($16,000 of depreciation expense for buildings and $17,600 for equipment). | |
| 2. | Land was sold for |
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| 3. | Cash dividends of $9,600 were paid. | |
| 4. | Net income for 2022 was $29,600. | |
| 5. | Equipment was purchased for $73,600 cash. In addition, equipment costing $7,600 with a book value of $8,000 was sold for $6,400 cash. | |
| 6. | 32,000 shares of $1 par value common stock were issued in exchange for land with a fair value of $32,000. |
Prepare a statement of
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Crane Company
Statement of Cash Flows Choose the accounting period |
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Select an opening name for section one
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Select an item
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$Enter a dollar amount
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Adjustments to reconcile net income to
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Selet an opening subsection name
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Select an item
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$Enter a dollar amount
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Select an item
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Enter a dollar amount
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Select an item
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Enter a dollar amount
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Select an item
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Enter a dollar amount | |
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Select an item
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Enter a dollar amount
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Select an item
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Enter a dollar amount
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Enter a total amount for this subsection
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Select a closing name for section one
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Enter a total amount for section one
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Select an opening name for section two
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Select an item
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Enter a dollar amount
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Select an item
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Enter a dollar amount
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Select an item
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Enter a dollar amount
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Select a closing name for section two
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Enter a total amount for section two
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Select an opening name for section three
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Select an item
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Enter a total amount for section three
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Select an item
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Enter a total amount for three sections
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Select an item
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Enter a dollar amount
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Select a closing name for three sections
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$Enter a total of the two previous amounts
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Select an opening name for section four
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Select an item
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$Enter a dollar amount
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