The income statement for Rhino Company for the current year ended June 30 is as follows: 1 Sales $444,100.00 2 Cost of merchandise sold 155,600.00 3 Gross profit $288,500.00 4 Operating expenses: 5 Depreciation expense $37,510.00 6 Other operating expenses 114,580.00 7 Total operating expenses 152,090.00 8 Income before income tax $136,410.00 9 Income tax expense 40,010.00 10 Net income $96,400.00 The balances of selected accounts at the beginning and the end of the current year are as follows: End Beginning of Year of Year Accounts receivable (net) $37,180 $31,240 Inventories 91,040 79,880 Prepaid expenses 14,990 15,950 Accounts payable (merchandise creditors) 68,570 63,000 Accrued expenses payable (operating expenses) 19,010 20,840 Income tax payable 3,470 3,470 Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. X Statement of Cash Flows-Operating Activities Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. Rhino Company Cash Flows from Operating Activities Section For the Year Ended June 30 1 Cash flows from operating activities: 2 3 4 5 6
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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1
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Sales
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$444,100.00
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2
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Cost of merchandise sold
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155,600.00
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3
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Gross profit
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$288,500.00
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4
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Operating expenses:
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5
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$37,510.00
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6
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Other operating expenses
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114,580.00
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7
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Total operating expenses
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152,090.00
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8
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Income before income tax
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$136,410.00
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9
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Income tax expense
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40,010.00
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10
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Net income
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$96,400.00
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End
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Beginning
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of Year
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of Year
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| $37,180 | $31,240 | |
| Inventories | 91,040 | 79,880 |
| Prepaid expenses | 14,990 | 15,950 |
| Accounts payable (merchandise creditors) | 68,570 | 63,000 |
| Accrued expenses payable (operating expenses) | 19,010 | 20,840 |
| Income tax payable | 3,470 | 3,470 |
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Rhino Company
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Cash Flows from Operating Activities Section
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For the Year Ended June 30
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1
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Cash flows from operating activities:
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2
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3
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4
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5
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6
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