Income statement and balance sheet data for The Athletic Attic are provided below. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 $10,540,000 6,890,000 3,650,000 Net sales Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense Interest expense Income tax expense Total expenses Net income 1,610,000 200,000 41,000 412,000 2,263,000 $ 1,387,000 2021 $8,950,000 5,500,000 3,450,000 1,560,000 200,000 41,000 360,000 2,161,000 $1,289,000
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.
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Income statement and balance sheet data for The Athletic Attic are provided below.
For the years
Net sales
Cost of goods sold
Gross profit
Expenses:
THE ATHLETIC ATTIC
Income Statements
Operating expenses.
Depreciation expense
Interest expense
Income tax expense
Total expenses
Net income
Assets
Current assets:
Cash
Accounts payable
Interest payable
ended December 31
2022
$10,540,000
6,890,000
3,650,000
Income tax payable
Long-term liabilities:
Notes payable
1,610,000
200,000
41,000
412,000
Accounts receivable
Inventory
Supplies
Long-term assets:
Equipment
Less: Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
2021
$8,950,000
5,500,000
3,450,000
1,560,000
200,000
41,000
360,000
2,161,000
2,263,000
$ 1,387,000 $1,289,000
THE ATHLETIC ATTIC
Balance Sheets
December 31
Stockholders' equity:
Common stock
Retained earnings
Total liabilities and stockholders' equity
$
2022
2021
226,000 $
991,000
1,726,000
131,000
155,000
741,000
1,356,000
101,000
1,140,000 1,140,000
(610,000)
(410,000)
$3,604,000 $3,083,000
0
36,000
2020
$ 206,000
761,000
1,026,000
76,000
$ 177,900 $ 108,000 $
4,100
41,000
510,000
510,000
1,140,000
84,900
4,100
31,000
510,000
610,000
610,000
610,000
2,261,000 1,819,000
1,759,000
$3,604,000 $3,083,000 $2,999,000
(210,000)
$2,999,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa880cc3d-71b2-44bc-9eb8-ccb18aa2c0ed%2F20cf7a17-be7f-4b3a-ba88-880169a7cb80%2Fwcnn8bf_processed.png&w=3840&q=75)
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