Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income.... Adjustments to reconcile net income to net cash flow from operating activities: $ 360,000 Depreciation.... Gain on sale of investments.... Changes in current operating assets and liabilities: Increase in accounts receivable...... 100,800 17,280 27,360 (36,000) Increase in inventories...... Increase in accounts payable ..... Decrease in accrued expenses payable.. Net cash flow from operating activities Cash flows from (used for) investing activities: Cash from sale of investments.... Cash used for purchase of land. Cash used for purchase of equipment. (3,600) (2,400) $ 463,440 $ 240,000 (259,200) (432,000) Net cash flow used for investing activities.. Cash flows from (used for) financing activities: Cash from sale of common stock .... (415,200) $ 312,000 Cash used for dividends ... (132,000) Net cash flow from financing activities. Increase (decrease) in cash..... 180,000 $ 47,760 Cash at the end of the year... 192,240 Cash at the beginning of the year... $240,000
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.
The following statement of
Please see the attachment for details:
a. List the errors you find in the statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
b. Prepare a corrected statement of cash flows.
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