Example of the Statement of Cash Flows Under the Direct Method: Page 590-592 Example of the Statement of Cash Flows Under the Direct Method: Page 590-592 a Kate's Cards Kate's Cards Statement of Cash Flows Statement of Cash Flows For the Year Ended August 31, 2019 For the Year Ended August 31, 2019 Cash flows from operating activities Cash flows from operating activities Cash collected from customers Cash paid for inventory Cash paid for operating expenses Cash paid for interest Cash paid for taxes Cash provided by operating activities 4 S-0 Cash provided by operating activities S-0 Cash flow from investing activities Cash flow from investing activities 4 Cash used by investing activities --0 Cash used by investing activities --0 6 Cash flow from financing activities Cash flow from financing activities 6. Cash provided by financing activities 3 4 -0 Cash provided by financing activities Increase in cash Cash balance, beginning of the year Increase in cash Cash balance, beginning of the year Cash balance, end of the year S-0 S-0 0.00 0.00 6 Cash balance, end of the year 7.
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.
I need help filling out the excel template with this given information.
Kate has just completed her first year of Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there is cash in the bank. She has not, however, prepared a statement of
Additional information:
1. There were no disposals of equipment during the year
2. Dividends in the amount of $1,300 were paid in cash during the year.
3. Prepaid expenses relate to operating expenses.
Required
a. Construct an statement of cash flows for Kate's Cards for the year-ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance sheet account balances were zero.
b. Construct an statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method.
KATE'S CARDS
Income Statement
Year Ended August 31,2019
Sales Revenue.........................................................................$185,000
Cost of Goods Sold...........................................................................................106,000
Gross profit...............................................................................79,000
Operating Expenses
Wages.......................................................................................18,000
Consulting.................................................................................11,850
Insurance...................................................................................1,200
Utilities.......................................................................................2,400
Rent............................................................................................14,400
Total Operating Expense.....................................................................................51,100
Income from Operations.........................................................27,900
Interest Expense.......................................................................900
Income before income tax..............................................................................................27,000
Income tax expense................................................................5,400
Net Income..............................................................................$21,600
KATE'S CARDS
Balance Sheet
As of August 31, 2019
Assets
Current assets
Cash.......................................................................................$17,400
Accounts receivable.............................................................11,000
Inventory...............................................................................16,000
Prepaid insurance................................................................1,000
Total Current Assets............................................................45,400
Equipment............................................................................17,500
Total Assets.........................................................................$59,650
Liabilities
Current Liabilities
Accounts Payable ...............................................................$6,200
Unearned revenue................................................................1,250
Other Current liabilities........................................................1,900
Total Current Liabilities.........................................................9,350
Note Payable.........................................................................15,000
Total Liabilities......................................................................24,350
Common Stock......................................................................500
Additional paid-in-capital.....................................................9,500
Total Stockholders' equity...................................................35,300
Total liabilities and stockholders' equity...........................$59,650
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