Balance Sheet Januery 1, 2019 Assets Liabilties and Shareholders' Equity $ 1,000 3,900 4,700 9,800 68,900 (14, 100 374,200 Cash Accounts receivable (net Inventory land Accounts payable Solaries payable Total Liabilities Common stock, $10 par Additional paidin copital Rekained earnings Total Liablities and Shoreholders' Equity $ 4,000 1,100 $ 5,100 Buildings and equipment Less: Accumulated depreciation 13,500 11,200 44 400 Total Assets 374,200 At the end of 2019, Mils prepared the following statement of cash flows: Statement of Cash Flows For Year Ended December 31, 2019 Operating Activities: $ 5,400 Net income Adustments for differences between income Rows and cash lows kom operating ocivilies Add: Depreciation aspense Decrease in inventory 1,900 500 400 11,100| 1,000 Increase in salories payoble Less: Increase in accounts receivable net Decrease in accounts poyable Net cash provided by operating acivities $6,100 Investing Activities: Payment for purchose of building Receipt from sale of land Net cosh used for investing octivities $(13,900) 3,000 (10,900) Financing Activities Payment of dividends Receipt from issuance of bonds Receipt kom issuance of common slock Net cash provided by financing ocivilies Net increase in cosh Cash, January 1, 2019 Cash, December 31, 2019 $ 13,100| 5,700 4,500 7,100 32,300 1,000 $3,300 Chapler 5 The Income Skotemert and the Statenent of Cash Flows Additional information related to the statement of cash flows: 1. The long-term bonds have a face valuc of S6,000 and were issued on December 31, 2019. 2. The building was purchased on December 30, 2019. 3. The land was sold at its original cost. 4. The common stock which was sold totaled 300 shares and had a par value of S10 per share.
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.
Mills Company prepared the following
Prepare a classified balance sheet for Mills as of December 31, 2019. ( Hint: Review the information on the statement of cash flows and the balances in the beginning balance sheet accounts to determine the impact on the ending balance sheet accounts.)
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