The following is a consolidated balance sheet and income statement for J-Mart for the fiscal years ended January 31, 2005 and 2006: 2005 2006 Cash and cash equivalents 5,488 1,715 29,762 1,889 6,414 2,662 32,191 2,591 Accounts receivable Inventory Prepaid expenses Total current assets 38,854 43,858 Plant, property and equipment Accumulated depreciation Property under capitalized lease (net) Other assets and deferred charges 84,037 (18,637) 2,718 13,182 97,302 (21,427) 3,415 15,021 Total assets 120,154 138,169 Accounts payable 21,987 12,120 1,281 3,812 3,982 25,373 13,465 1,322 3,754 4,894 Accrued liabilities Accrued income taxes Commercial paper Current portion of long-term debt Total current liabilities 43,182 48,808 Long-term liabilities Long-term debt under capital leases Deferred income taxes 20,087 3,171 4,318 49,396 26,429 3,742 6,019 53,171 Shareholders' equity Total liabilities & stockholders' equity 120.154 138.169 Net Sales 312,427 3,227 315,654 Other income, net Total revenue Costs and expenses Cost of goods sold Selling, marketing and administrative 240,391 56,733 Operating income 18,530 1,171 249 Interest – debt Interest – leases Interest income (248) Income from continuing operations before tax and minority interest Provision for income taxes 17,358 5,803 Income from continuing operations before minority interest Minority interest 11,555 (324) Net income 11.231 Earnings per share 2.68 Other information (2006): 2,511 3,580 Common stock dividend Common stock repurchases a. Prepare a cash flow statement from the above information.
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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