Wilko Ltd had cash and cash equivalents at 1 July 2016 of $100 000. The transactions of Wilko Ltd for the year to 30 June 2017 are as follows: 1. Received $380 000 cash for customer accounts 2. Invested $100 000 cash on the short-term money market 3. Sold for $40 000 cash a plant asset with a carrying amount of $30 000 4. Issued ordinary shares for $120 000 cash 5. Cash payments for suppliers accounts $250 000 6. Purchased a plant asset for $87 000; $27 000 in cash and $60 000 vendor loan 7. Insurance expense shown in the income statement is $14000. At the end of the year the balance sheet shows prepaid insurance expense of $7000. There was a prepaid insurance expense of $6000 at the beginning of the year. 8. Exchanged 10 000 shares for land with a fair value of $100 000 9. Received a $40 000 dividend in cash 10. Paid fixed-term loan principal of $80 000 and interest of $8000 11. Dividend paid during the period $20000 12. Borrowed $30 000 with a 6-month loan payable Required Prepare the statement of cash flows of Wilko Ltd for the year to 30 June 2017.
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.
Wilko Ltd had cash and cash equivalents at 1 July 2016 of $100 000. The transactions of Wilko Ltd for the year to 30 June 2017 are as follows:
1. Received $380 000 cash for customer accounts
2. Invested $100 000 cash on the short-term
3. Sold for $40 000 cash a plant asset with a carrying amount of $30 000
4. Issued ordinary shares for $120 000 cash
5. Cash payments for suppliers accounts $250 000
6. Purchased a plant asset for $87 000; $27 000 in cash and $60 000
vendor loan
7. Insurance expense shown in the income statement is $14000. At the
end of the year the
8. Exchanged 10 000 shares for land with a fair value of $100 000
9. Received a $40 000 dividend in cash
10. Paid fixed-term loan principal of $80 000 and interest of $8000
11. Dividend paid during the period $20000
12. Borrowed $30 000 with a 6-month loan payable
Required
Prepare the statement of
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