The following are the balance sheets of Kings paper works Ltd. For the two years at 31st December 2013 and 2014. Items 31/12/2013 31/12/2014 Kshs. Kshs. Issued share capital at sh.10 per share Ordinary shares Retainer profits 180,000 230,000 75,000 92,000 10% debentures 60,000 75,000 Taxation payable lst January following Trade & expenscs creditors Proposed dividends (gross) 29,000 32,000 32,000 34,000 5,000 6,000 381,000 230,000 469,000 250,000 Fixed assets at cost Less depreciation -56,500 -62,000 173,500 188,000 Inventory 120,000 146,950 Debtors 42,000 41,500 Balance at bank 45,500 92,550 381,000 469,000 Additional information: During the year, fixed assets were purchased at a cost of sh. 56,000. Fixed assets which cost sh. 36,000 were disposed of for sh.25, 000. The book value of these assets was sh. 15,000 and the profits has been included in retained profits. Required Prepare a funds flow statement for Kings Paper Works Ltd for the year ended 31st Dec 2014.
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.
Step by step
Solved in 5 steps
