XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Current Year Previous Year Balance Sheet at December 31 Cash $ 32,810 33,800 39,800 112,e0e (28,800) $189,610 $ 27,750 27,400 37,400 94, eee (24,400) $162,15e Accounts Receivable Inventory Equipment Accumulated Depreciation-Equipment Total Assets Accounts Payable Salaries and Wages Payable Note Payable (1ong-term) $ 34,800 1,210 32,600 85, eee 36,000 $189,610 $ 26,400 1,35e 38,00e 72,e00 24,400 Common Stock Retained Earnings Total Liabilities and Stockholders' Equity $162,150 Income Statement Sales Revenue Cost of Goods Sold Other Expenses $114,e00 67,00e 35,400 $ 11,600 Net Income Additional Date: a. Bought equipment for cash, $18,000. b. Paid $5,400 on the long-term note payable. c. Issued new shares of stock for $13,000 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $4,400; salaries and wages, $19,400; taxes. $5.400; utilities, $6,200. E Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses. assume that these expenses were fully paid in cash.
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.
![PA12-3 Preparlng a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5]
XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the
statement of cash flows. The completed comparative balance sheets and income statement are summarized:
Current Year
Previous Year
Balance Sheet at December 31
$ 32,810
$ 27,750
27,400
37,400
94, 000
(24,400)
$162,150
Cash
Accounts Receivable
Inventory
Equipment
Accumulated Depreciation-Equipment
33,800
39, 800
112,e0e
(28,800)
$189,610
Total Assets
$ 34,800
Accounts Payable
Salaries and Wages Payable
Note Payable (long-term)
Common Stock
1,210
32,600
85, e00
36,000
$189,610
$ 26,400
1,350
38,000
72,000
24,400
$162,150
Retained Earnings
Total Liabilities and Stockholders' Equity
Income Statement
Sales Revenue
$114, e00
67,000
35,400
$ 11,600
Cost of Goods Sold
Other Expenses
Net Income
Addltlonal Data:
a. Bought equipment for cash, $18,000.
b. Paid $5,400 on the long-term note payable.
c. Issued new shares of stock for $13.000 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $4,400; salaries and wages, $19,400; taxes, $5.400; utilities, $6,200.
f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes
or other expenses, assume that these expenses were fully paid in cash.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7f57acd-42b9-466e-a85d-4609f38f005a%2Ffeb4ef92-c70b-460e-9359-aecbc4a4374b%2Fuho53br_processed.png&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
