Financial statements for Swifty Corporation are given below: Swifty Corporation Balance Sheet January 1, 2021 Assets Equities Cash $ 954000 Accounts payable $ 455000 Accounts receivable 864000 Buildings and equipment 3530000 Accumulated depreciation— buildings and equipment (1260000 ) Common stock 2710000 Patents 434000 Retained earnings 1357000 $4522000 $4522000 Swifty Corporation Statement of Cash Flows For the Year Ended December 31, 2021 Increase (Decrease) in Cash . Cash flows from operating activities Net income $1180000 Adjustments to reconcile net income to net cash provided by operating activities: Increase in accounts receivable $(387000 ) Increase in accounts payable 191000 Depreciation—buildings and equipment 355000 Gain on sale of equipment (146000 ) Amortization of patents 55000 68000 Net cash provided by operating activities 1248000 . Cash flows from investing activities Sale of equipment 293000 Purchase of land (601000 ) Purchase of buildings and equipment (1148000 ) Net cash used by investing activities (1456000) . Cash flows from financing activities Payment of cash dividend (363000 ) Sale of common stock 970000 Net cash provided by financing activities 607000 Net increase in cash 399000 Cash, January 1, 2021 954000 Cash, December 31, 2021 $1353000 Total assets on the balance sheet at December 31, 2021 are $6647000. Accumulated depreciation on the equipment sold was $330000. Capital stock (plus any additional paid-in capital) at December 31, 2021 was $3680000. $2710000. $1530000. $2347000.
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.
Financial statements for Swifty Corporation are given below:
| Swifty Corporation | ||||||
| Balance Sheet | ||||||
| January 1, 2021 | ||||||
| Assets | Equities | |||||
| Cash | $ 954000 | Accounts payable | $ 455000 | |||
| 864000 | ||||||
| Buildings and equipment | 3530000 | |||||
| Accumulated buildings and equipment |
(1260000 | ) | Common stock | 2710000 | ||
| Patents | 434000 | 1357000 | ||||
|
$4522000
|
$4522000
|
| Swifty Corporation | |||||||
| Statement of Cash Flows | |||||||
| For the Year Ended December 31, 2021 | |||||||
| Increase (Decrease) in Cash | |||||||
| . | |||||||
| Cash flows from operating activities | |||||||
| Net income | $1180000 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
| Increase in accounts receivable | $(387000 | ) | |||||
| Increase in accounts payable | 191000 | ||||||
| Depreciation—buildings and equipment | 355000 | ||||||
| Gain on sale of equipment | (146000 | ) | |||||
| Amortization of patents | 55000 | 68000 | |||||
| Net cash provided by operating activities | 1248000 | ||||||
| . | |||||||
| Cash flows from investing activities | |||||||
| Sale of equipment | 293000 | ||||||
| Purchase of land | (601000 | ) | |||||
| Purchase of buildings and equipment | (1148000 | ) | |||||
| Net cash used by investing activities | (1456000) | ||||||
| . | |||||||
| Cash flows from financing activities | |||||||
| Payment of cash dividend | (363000 | ) | |||||
| Sale of common stock | 970000 | ||||||
| Net cash provided by financing activities | 607000 | ||||||
| Net increase in cash | 399000 | ||||||
| Cash, January 1, 2021 | 954000 | ||||||
| Cash, December 31, 2021 |
$1353000
|
Total assets on the balance sheet at December 31, 2021 are $6647000. Accumulated depreciation on the equipment sold was $330000.
Capital stock (plus any additional paid-in capital) at December 31, 2021 was
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