Shown below are comparative balance sheets for Sandhill Company. Sandhill CompanyComparative Balance SheetsDecember 31 Assets 2017 2016 Cash $ 211,208 $ 68,332 Accounts receivable 273,328 236,056 Inventory 518,702 587,034 Land 248,480 310,600 Equipment 807,560 621,200 Accumulated depreciation—equipment (204,996 ) (99,392 ) Total $1,854,282 $1,723,830 Liabilities and Stockholders’ Equity Accounts payable $ 121,134 $ 133,558 Bonds payable 465,900 621,200 Common stock ($1 par) 670,896 540,444 Retained earnings 596,352 428,628 Total $1,854,282 $1,723,830 Additional information: 1. Net income for 2017 was $288,858. 2. Depreciation expense was $105,604. 3. Cash dividends of $121,134 were declared and paid. 4. Bonds payable amounting to $155,300 were redeemed for cash $155,300. 5. Common stock was issued for $130,452 cash. 6. No equipment was sold during 2017. 7. Land was sold for its book value. Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)). Sandhill CompanyStatement of Cash FlowsChoose the accounting period December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017 $Enter a dollar amount $Enter a dollar amount Enter a dollar amount Enter a dollar amount Enter a total amount for section two Enter a dollar amount Enter a dollar amount Enter a dollar amount Enter a total amount for section three Enter a dollar amount Select a closing name for this statement Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing Activi
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.
Shown below are comparative balance sheets for Sandhill Company.
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Sandhill Company
Comparative Balance Sheets December 31 |
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|---|---|---|---|---|---|---|
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Assets
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2017
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2016
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Cash
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$ 211,208
|
$ 68,332
|
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|
Accounts receivable
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273,328
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236,056
|
||||
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Inventory
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518,702
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587,034
|
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Land
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248,480
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310,600
|
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Equipment
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807,560
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621,200
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|
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(204,996
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)
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(99,392
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)
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Total
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$1,854,282
|
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$1,723,830
|
|
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Liabilities and
|
||||||
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Accounts payable
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$ 121,134
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$ 133,558
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Bonds payable
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465,900
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621,200
|
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Common stock ($1 par)
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670,896
|
540,444
|
||||
|
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596,352
|
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428,628
|
|
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|
Total
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$1,854,282
|
|
$1,723,830
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Additional information:
| 1. | Net income for 2017 was $288,858. | |
| 2. | Depreciation expense was $105,604. | |
| 3. | Cash dividends of $121,134 were declared and paid. | |
| 4. | Bonds payable amounting to $155,300 were redeemed for cash $155,300. | |
| 5. | Common stock was issued for $130,452 cash. | |
| 6. | No equipment was sold during 2017. | |
| 7. | Land was sold for its book value. |
Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)).
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Sandhill Company
Statement of Cash Flows Choose the accounting period December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017
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$Enter a dollar amount
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$Enter a dollar amount
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Enter a dollar amount
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Enter a dollar amount
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Enter a total amount for section two
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Enter a dollar amount
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Enter a dollar amount
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Enter a dollar amount
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Enter a total amount for section three
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Enter a dollar amount
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Select a closing name for this statement
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing Activi
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