would like a second opinion on this below The comparative balance sheet and income statement of PAJ Co Ltd, have just been prepared and presented to the owners by the company’s Accountant. The owners are concerned about the movement in the company’s cash and cash equivalent given that the balance sheet does not show or explain the reason or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners. The owners have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your surname initial.      PAJ Co Ltd Comparative Balance Sheet December 31, 2020, and 2021   2021 2020         Assets        Cash and cash equivalent      350,000         450,000    Accounts Receivable      440,850                     -      Inventory      225,222         315,898    Prepaid expenses      185,000         185,000 Equipment, net      668,500         495,880 Total Assets  1,869,572      1,446,778       Liabilities        Accounts payable                 -           198,500    Accrued liabilities      225,550         190,545 Bond payable      555,840         365,520       Stockholders' Equity:     Common Stock      245,600         145,600 Retained earnings  1,037,582         711,613 Treasury stock    (195,000)        (165,000) Total liabilities and stockholders' equity  1,869,572      1,446,778   PAJ Co Ltd Income Statement Year Ended December 31,2021 Revenues and gains:        Sales revenue  1,500,000      Gain on sale of equipment        28,000       Interest revenue           Total revenues and gains        1,528,000 Expenses        Cost of goods sold      704,500      Salary expense      185,000      Depreciation expense        40,000      Rent expense      200,000         Total expenses        1,129,500 Income before income taxes           398,500 Income tax expense              44,500 Net Profit           354,000         Notes     Purchase of equipment           337,620 Cash receipt from sale of equipment           153,000 Issuance of bonds payable to borrow cash           190,320 Cash receipt from issuance of common stock           100,000 Dividend paid              28,031 Book value of equipment sold           125,000 Purchase of treasury stock              30,000   Prepare a complete statement of cash flows for December 2021 using the indirect method based on the information and guidance provided

FINANCIAL ACCOUNTING
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I would like a second opinion on this below

The comparative balance sheet and income statement of PAJ Co Ltd, have just been prepared and presented to the owners by the company’s Accountant. The owners are concerned about the movement in the company’s cash and cash equivalent given that the balance sheet does not show or explain the reason or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners.

The owners have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your surname initial. 

 

 

PAJ Co Ltd

Comparative Balance Sheet

December 31, 2020, and 2021

 

2021

2020

        Assets

 

 

   Cash and cash equivalent

     350,000

        450,000

   Accounts Receivable

     440,850

                    -  

   Inventory

     225,222

        315,898

   Prepaid expenses

     185,000

        185,000

Equipment, net

     668,500

        495,880

Total Assets

 1,869,572

     1,446,778

      Liabilities

 

 

   Accounts payable

                -  

        198,500

   Accrued liabilities

     225,550

        190,545

Bond payable

     555,840

        365,520

      Stockholders' Equity:

 

 

Common Stock

     245,600

        145,600

Retained earnings

 1,037,582

        711,613

Treasury stock

   (195,000)

       (165,000)

Total liabilities and stockholders' equity

 1,869,572

     1,446,778

 

PAJ Co Ltd

Income Statement

Year Ended December 31,2021

Revenues and gains:

 

 

   Sales revenue

 1,500,000

 

   Gain on sale of equipment

       28,000

 

    Interest revenue

 

 

      Total revenues and gains

 

     1,528,000

Expenses

 

 

   Cost of goods sold

     704,500

 

   Salary expense

     185,000

 

   Depreciation expense

       40,000

 

   Rent expense

     200,000

 

      Total expenses

 

     1,129,500

Income before income taxes

 

        398,500

Income tax expense

 

           44,500

Net Profit

 

        354,000

     

 

Notes

   

Purchase of equipment

 

        337,620

Cash receipt from sale of equipment

 

        153,000

Issuance of bonds payable to borrow cash

 

        190,320

Cash receipt from issuance of common stock

 

        100,000

Dividend paid

 

           28,031

Book value of equipment sold

 

        125,000

Purchase of treasury stock

 

           30,000

 

  1. Prepare a complete statement of cash flows for December 2021 using the indirect method based on the information and guidance provided above.
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