Sage Corp. uses the direct method to prepare its statement of cash flows. Sage trial balances at December 31, 2020 and 2019, are as follows. December 31 Debits 2020 2019 Cash $35,200 $32,200 Accounts receivable 33,300 29,900 Inventory 31,300 47,500 Property, plant, & equipment 99,600 94,700 Unamortized bond discount 4,600 5,100 Cost of goods sold 250,100 378,800 Selling expenses 140,300 172,900 General and administrative expenses 135,900 151,600 Interest expense 4,300 2,700 Income tax expense 20,600 61,400 $755,200 $976,800 Credits Allowance for doubtful accounts $1,300 $1,000 Accumulated depreciation—plant assets 16,600 15,100 Accounts payable 25,000 15,300 Income taxes payable 20,900 28,900 Deferred tax liability 5,200 4,500 8% callable bonds payable 44,900 20,000 Common stock 49,900 40,000 Paid-in capital in excess of par 9,100 7,500 Retained earnings 44,700 64,000 Sales revenue 537,600 780,500 $755,200 $976,800 Additional information: 1. Sage purchased $4,900 in equipment during 2020. 2. Sage allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses. 3. Bad debt expense for 2020 was $5,000, and write-offs of uncollectible accounts totaled $4,700. Determine what amounts Sage should report in its statement of cash flows for the year ended December 31, 2020, for the following items. (a) Cash collected from customers. $5,29,500? (b) Cash paid to suppliers. $2,24,200? (c) Cash paid for interest. $500? (d) Cash paid for income taxes. $ ? (e) Cash paid for selling expenses. $ ?
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.
Can I please get some help with this? I got it wrong on my first try and I'm not sure if the answers I have now are right .. and I'm missing the last 2. Clear answers and any notes would be greatly appreciated.
Sage Corp. uses the direct method to prepare its statement of cash flows. Sage
|
December 31
|
||||
| Debits |
2020
|
2019
|
||
| Cash |
$35,200
|
$32,200
|
||
| Accounts receivable |
33,300
|
29,900
|
||
| Inventory |
31,300
|
47,500
|
||
| Property, plant, & equipment |
99,600
|
94,700
|
||
| Unamortized bond discount |
4,600
|
5,100
|
||
| Cost of goods sold |
250,100
|
378,800
|
||
| Selling expenses |
140,300
|
172,900
|
||
| General and administrative expenses |
135,900
|
151,600
|
||
| Interest expense |
4,300
|
2,700
|
||
| Income tax expense |
20,600
|
61,400
|
||
|
$755,200
|
$976,800
|
|||
| Credits | ||||
| Allowance for doubtful accounts |
$1,300
|
$1,000
|
||
|
16,600
|
15,100
|
|||
| Accounts payable |
25,000
|
15,300
|
||
| Income taxes payable |
20,900
|
28,900
|
||
|
5,200
|
4,500
|
|||
| 8% callable bonds payable |
44,900
|
20,000
|
||
| Common stock |
49,900
|
40,000
|
||
| Paid-in capital in excess of par |
9,100
|
7,500
|
||
|
44,700
|
64,000
|
|||
| Sales revenue |
537,600
|
780,500
|
||
|
$755,200
|
$976,800
|
Additional information:
| 1. | Sage purchased $4,900 in equipment during 2020. | |
| 2. | Sage allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses. | |
| 3. |
Determine what amounts Sage should report in its statement of cash flows for the year ended December 31, 2020, for the following items.
| (a) | Cash collected from customers. |
$5,29,500?
|
||
| (b) | Cash paid to suppliers. |
$2,24,200?
|
||
| (c) | Cash paid for interest. |
$500?
|
||
| (d) | Cash paid for income taxes. |
$ ?
|
||
| (e) | Cash paid for selling expenses. |
$ ?
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
