The Davidson Corporation's balance sheet and income statement are provided here. Davidson Corporation: Balance Sheet as of December 31, 2021 (millions of dollars) Assets Cash and equivalents Accounts receivable Inventories Total current assets Net plant and equipment Total assets EBIT Interest EBT Taxes (25%) Net Income $ Common dividends pald Earnings per share 20 Accounts payable 470 Accruals 890 Notes payable $ 1,380 2,520 Liabilities and Equity Davidson Corporation: Income Statement for Year Ending December 31, 2021 (millions of dollars) Total current liabilities Long-term bonds Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization $ Total liabilities Common stock (100 million shares) Retained earnings Common equity $3,900 Total liabilities and equity $ Shares million $ 610 1,510 $ 2,120 280 $ 1,500 $ 1,780 $3,900 $5,500 4,470 $ 1,030 340 140 250 220 690 250 $ a. Construct the statement of stockholders' equity for December 31, 2021. No common stock was issued during 2021. Write out all your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest share or dollar. Common Stock 440 110 330 148 3.30 Amount Retained Earnings Balances, 12/31/20 2021 Net Income Cash dividends Addition to RE Balances, 12/31/21 Enter your answers for parts b-d in millions. For example, an answer of $25,000,000 should be entered as 25. b. How much money has been reinvested in the firm over the years? Round your answer to the nearest hundredth of million, if necessary. Total Stockholders' Equity $ million c. At the present time, how large a check could be written without it bouncing? Round your answer to the nearest hundredth of million, if necessary. $ million d. How much money must be paid to current creditors within the next year? Round your answer to the nearest hundredth of million, if necessary. $
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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