Prepare Common-Size financial statements for the income statement and balance sheet for 2021 and 2020 Prepare Statement of Cash Flows for 2021 Finance data of Adams Stores, Inc. for the year ending 2021 and 2020 Items 2021 2020 Sales $6,034,000 $3,432,000 Cash 7,282 57,600 Other Expenses 519,988 358,672 Retained Earnings 32,592 203,768 Long-term debt 723,432 323,432 Cost of goods sold 5,528,000 2,864,000 Depreciation 116,960 18,900 Short-term investments 0 0 Gross Fixed Assets 1,202,950 491,000 Interest Expenses 136,012 43,828 Shares outstanding 100,000 100,000 Market Price of stock 2.25 8.50 Accounts Receivable 632,160 351,200 Accounts payable 524,160 145,600 Inventory 1,287,360 715,200 Notes Payable 636,808 200,000 Accumulated Depreciation 263,160 146,200 Accruals 489,600 136,000 Tax Rate 40% 40% Stock Price $5.50 $7.25
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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Prepare Common-Size financial statements for the income statement and balance sheet for 2021 and 2020
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Prepare Statement of
Cash Flows for 2021
Finance data of Adams Stores, Inc. for the year ending 2021 and 2020
|
Items |
2021 |
2020 |
|
Sales |
$6,034,000 |
$3,432,000 |
|
Cash |
7,282 |
57,600 |
|
Other Expenses |
519,988 |
358,672 |
|
|
32,592 |
203,768 |
|
Long-term debt |
723,432 |
323,432 |
|
Cost of goods sold |
5,528,000 |
2,864,000 |
|
|
116,960 |
18,900 |
|
Short-term investments |
0 |
0 |
|
Gross Fixed Assets |
1,202,950 |
491,000 |
|
Interest Expenses |
136,012 |
43,828 |
|
Shares outstanding |
100,000 |
100,000 |
|
Market Price of stock |
2.25 |
8.50 |
|
Accounts Receivable |
632,160 |
351,200 |
|
Accounts payable |
524,160 |
145,600 |
|
Inventory |
1,287,360 |
715,200 |
|
Notes Payable |
636,808 |
200,000 |
|
|
263,160 |
146,200 |
|
Accruals |
489,600 |
136,000 |
Tax Rate 40% 40%
Stock Price $5.50 $7.25
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