-UL -- ---- Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net of 3 $ 31,600 88,000 112,500 10,650 281,000 $ 36, 250 $ 62,000 83,800 9,350 249, 500 38,400 49, 500 52,500 4,500 235,000 Total assets $523,750 $440,900 $ 379,900 Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings $128,400 $ 74,750 $ 50,800 mok 81,600 97,000 160,500 137,850 $523,750 98,250 160,500 107,400 160,500 nt 87,000 Total liabilities and equity $440,900 $ 379,900 nt ences The company's income statements for the Current Year and 1 Year Ago, follow. 1 Yr Ago $ 620,000 Current Yr For Year Ended December 31 Sales $755,000 Cost of goods sold other operating expenses Interest expense $445,450 234,050 11,300 9,550 $390,600 148,800 12,700 8,925 Income tax expense Total costs and expenses 561,025 700, 350 $ 54,650 $ 58,975 Net income < Prev of 8 Next >
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.
![Exercise 13-10 Part 3
(3-a) Return on total assets.
(3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?
Complete this question by entering your answers in the tabs below.
Required 3A
Required 3B
Return on total assets
Return On Total Assets
Choose Numerator:
I Choose Denominator:
Return On Total Assets
%3D
Return on total assets
%3D
Current Year:
1 Year Ago:
<Required 3A
Required 3B >
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![-- ----
.....
Simon Company's year-end balance sheets follow.
At December 31
Current Yr
1 Yr Ago 2 Yrs Ago
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
of 3
$ 31,600
88,000
112,500
10,650
281,000
$ 36,250 $
62,000
83,800
9,350
249,500
38,400
49, 500
52,500
4,500
235,000
Total assets
$523,750
$440,900 $ 379,900
Liabilities and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
Common stock, $10 par value
Retained earnings
$128,400
$ 74,750 $ 50,800
ok
81,600
97,000
160,500
137,850
98,250
160,500
107,400
$440,900 $ 379,900
160,500
nt
87,000
Total liabilities and equity
$523,750
nt
ences
The company's income statements for the Current Year and 1 Year Ago, follow.
1 Yr Ago
$ 620,000
Current Yr
For Year Ended December 31
Sales
$755,000
Cost of goods sold
other operating expenses
Interest expense
Income tax expense
Total costs and expenses
$445,450
234,050
11,300
9,550
$390,600
148,800
12,700
8,925
561,025
700,350
$ 54,650
$ 58,975
Net income
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