UTV Corp. have the following account balances for the year ended December 31, 2020: DEBIT BALANCES Amount Cash and cash equivalents 400,000 Accounts receivable 900,000 Raw materials 560,000 Goods in process 600,000 Finished goods 1,400,000 Financial assets at FVOCI 2,500,000 Sinking fund 200,000 Land 1,000,000 Building 6,000,000 Plant and equipment 2,400,000 Patent 800,000 Goodwill 1,400,000 Unrealized loss – FVOCI 100,000 Prepaid benefit cost 20,000 Treasury shares at cost 250,000 TOTAL 18,530,000 CREDIT BALANCES Amount Bank overdraft 100,000 Due from an officer 50,000 Allowance for bad debts 40,000 Accumulated depreciation – building 1,600,000 Accumulated depreciation – plant and equipment 400,000 Notes payable, due June 30, 2021 1,300,000 Notes payable, due June 30, 2022 2,100,000 Accounts payable 1,000,000 Provision 180,000 Warranty liabilities 80,000 Income tax payable 120,000 Finance lease liability 180,000 Deferred tax liability 280,000 Actuarial gain 300,000 Revaluation surplus 360,000 Share capital 6,000,000 Share premium 2,000,000 Retained earnings – unappropriated 2,440,000 TOTAL 18,530,000 Additional information: The sinking fund was established for the payment of Notes Payable due on June 30, 2021. An Accounts Payable with a debit balance of P150,000 was deducted on the Accounts Payable presented above. A legal term attached on the Notes Payable due on June 30, 2022 was violated. Required: Prepare a Statement of Financial Position as of December 31, 2020.
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.
UTV Corp. have the following account balances for the year ended December 31, 2020:
DEBIT BALANCES
Amount
Cash and cash equivalents
400,000
900,000
Raw materials
560,000
Goods in process
600,000
Finished goods
1,400,000
Financial assets at FVOCI
2,500,000
Sinking fund
200,000
Land
1,000,000
Building
6,000,000
Plant and equipment
2,400,000
Patent
800,000
1,400,000
Unrealized loss – FVOCI
100,000
Prepaid benefit cost
20,000
Treasury shares at cost
250,000
TOTAL
18,530,000
CREDIT BALANCES
Amount
Bank overdraft
100,000
Due from an officer
50,000
Allowance for
40,000
1,600,000
Accumulated depreciation – plant and equipment
400,000
Notes payable, due June 30, 2021
1,300,000
Notes payable, due June 30, 2022
2,100,000
Accounts payable
1,000,000
Provision
180,000
Warranty liabilities
80,000
Income tax payable
120,000
Finance lease liability
180,000
280,000
Actuarial gain
300,000
Revaluation surplus
360,000
Share capital
6,000,000
Share premium
2,000,000
2,440,000
TOTAL
18,530,000
Additional information:
The sinking fund was established for the payment of Notes Payable due on June 30, 2021.
An Accounts Payable with a debit balance of P150,000 was deducted on the Accounts Payable
presented above.
A legal term attached on the Notes Payable due on June 30, 2022 was violated.
Required:
Prepare a Statement of Financial Position as of December 31, 2020.
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