Problem 1: Statement of Cash Flow The following comparative balance sheets and other data are for Dayton Tent & Awning Sales, Inc.: Dayton Tent & Awning Sales, Inc. Comparative balance sheets For Two Years Ended December 31 Current Accounts receivable, net Merchandise inventory Prepaid Insurance Assets Cash Machinery and Tools Accumulated depreciation - Machinery and Tool Total assets Land Buildings Liabilities and stockholders' equity Accounts payable Accrued liabilities payable Long-term note payable Mortgage Bonds payable Common stock ($100 par) Paid-in capital in excess of par Retained earnings Total liabilities and stockholders' equity Current Assets: Current Liabilities: $441,800 750,750 819,000 3,900 312,000 2,184,000 858,000 -809,250 $4,560,200 $226,750 185,800 56,550 382,200 1,755,000 58,500 1,895,400 $4,560,200 Last Year Current $332,600 432,900 850,200 5,850 351,000 1,209,000 468,000 -510,900 $3,138,650 a) Net income for the year was $128,000. b) Depreciation for the year was $356,850. c) There was a gain of $7,800 on the sale of land. The land was sold for $46,800 cash. d) The additional mortgage bonds were issued at face value as partial payment for a building valued at $975,000. T e) Machinery and tools were purchased for $448,500 cash. f) Fully depreciated machinery with a cost of $58,500 was scrapped and written off. (hint: no cash was received for g) Additional common stock was issued at $105 per share. The total proceeds were $1,228,500. h) Dividends were declared and paid (hint: calculate amount of dividends paid). i) A payment was made on the long-term note, $9,750. 1. Calculate the difference between each year for the current assets and current liabilities. 275,500 111,700 66,300 185,250 585,000 -0- 1,914,900 $3,138,650 Last Year Difference
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.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps