The income statement and additional data of Starry Night Corporation follow: (Click the icon to view the additional data.) (Click the icon to view the Income Statement.) Prepare Starry Night Corporation's statement of cash flows for the year ended June 30, 2024. Use the direct method. (Use a minus sign or parentheses for amounts that result in a decrease in cash. If a box is not used in statement leave the box empty; do not select a label or enter a zero.) Complete the statement one section at a time, beginning with the cash flows from operating activities. Starry Night Corporation Statement of Cash Flows Year Ended June 30, 2024 Cash Flows from Operating Activities: Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense-Plant Assets Advertising Expense Total Operating Expenses Operating Income Other Income and (Expenses): Dividend Revenue Interest Expense Total Other Income and (Expenses) Starry Night Corporation Income Statement Year Ended June 30, 2024 Net Income Before Income Taxes Income Tax Expense Net Income More info C. e. f. g. h. $ 41,000 23,000 12,500 8,000 (5,000) i. Payment of dividends is $12,000. j. $ $ 227,000 102,000 125,000 ← 76,500 48,500 a. Collections from customers are $16,500 more than sales. b. Dividend revenue, interest expense, and income tax expense equal their cash amounts. 3,000 51,500 8,500 Payments to suppliers are the sum of cost of goods sold plus advertising expense. d. Payments to employees are $1,000 more than salaries expense. Cash payment for the acquisition of plant assets is $101,000. Cash receipts from sale of land total $28,000. 43,000 Cash receipts from issuance of common stock total $35,000. Payment of long-term notes payable is $20,000. Cash balance at June 30, 2023, was $27,000; at June 30, 2024, it was $38,500. - X
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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