The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows: 1 Dec. 31, 20Y2 Dec. 31, 20Y1 2 Assets 3 Cash $918,000.00 $964,800.00 4 Accounts receivable (net) 828,900.00 761,940.00 5 Inventories 1,268,460.00 1,162,980.00 6 Prepaid expenses 29,340.00 35,100.00 7 Land 315,900.00 479,700.00 8 Buildings 1,462,500.00 900,900.00 9 Accumulated depreciation-buildings (408,600.00) (382,320.00) 10 Equipment 512,280.00 454,680.00 11 Accumulated depreciation-equipment (141,300.00) (158,760.00) 12 Total assets $4,785,480.00 $4,219,020.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise creditors) $922,500.00 $958,320.00 15 Bonds payable 270,000.00 0.00 16 Common stock, $25 par 317,000.00 117,000.00 17 Paid-in capital in excess of par—common stock 758,000.00 558,000.00 18 Retained earnings 2,517,980.00 2,585,700.00 19 Total liabilities and stockholders’ equity $4,785,480.00 $4,219,020.00 The noncurrent asset, noncurrent liability, and stockholders’ equity accounts for 20Y2 are as follows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 479,700 Apr. 20 Realized $151,200 cash from sale 163,800 315,900 ACCOUNT Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 900,900 Apr. 20 Acquired for cash 561,600 1,462,500 ACCOUNT Accumulated Depreciation–Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 382,320 Dec. 31 Depreciation for year 26,280 408,600 ACCOUNT Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 454,680 26 Discarded, no salvage 46,800 407,880 Aug. 11 Purchased for cash 104,400 512,280 ACCOUNT Accumulated Depreciation–Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 158,760 26 Equipment discarded 46,800 111,960 Dec. 31 Depreciation for year 29,340 141,300 ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 May 1 Issued 20-year bonds 270,000 270,000 ACCOUNT Common Stock $25 par ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 117,000 Dec. 7 Issued 8,000 shares of common stock for $50 per share 200,000 317,000 ACCOUNT Paid-In Capital in Excess of Par–Common Stock ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 558,000 Dec. 7 Issued 8,000 shares of common stock for $50 per share 200,000 758,000 ACCOUNT Retained Earnings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 2,585,700 Dec. 31 Net loss 35,320 2,550,380 31 Cash dividends 32,400 2,517,980 Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate net loss, cash outflows, cash payments, decreases in cash, or any negative adjustments.
The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows: 1 Dec. 31, 20Y2 Dec. 31, 20Y1 2 Assets 3 Cash $918,000.00 $964,800.00 4 Accounts receivable (net) 828,900.00 761,940.00 5 Inventories 1,268,460.00 1,162,980.00 6 Prepaid expenses 29,340.00 35,100.00 7 Land 315,900.00 479,700.00 8 Buildings 1,462,500.00 900,900.00 9 Accumulated depreciation-buildings (408,600.00) (382,320.00) 10 Equipment 512,280.00 454,680.00 11 Accumulated depreciation-equipment (141,300.00) (158,760.00) 12 Total assets $4,785,480.00 $4,219,020.00 13 Liabilities and Stockholders’ Equity 14 Accounts payable (merchandise creditors) $922,500.00 $958,320.00 15 Bonds payable 270,000.00 0.00 16 Common stock, $25 par 317,000.00 117,000.00 17 Paid-in capital in excess of par—common stock 758,000.00 558,000.00 18 Retained earnings 2,517,980.00 2,585,700.00 19 Total liabilities and stockholders’ equity $4,785,480.00 $4,219,020.00 The noncurrent asset, noncurrent liability, and stockholders’ equity accounts for 20Y2 are as follows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 479,700 Apr. 20 Realized $151,200 cash from sale 163,800 315,900 ACCOUNT Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 900,900 Apr. 20 Acquired for cash 561,600 1,462,500 ACCOUNT Accumulated Depreciation–Buildings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 382,320 Dec. 31 Depreciation for year 26,280 408,600 ACCOUNT Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 454,680 26 Discarded, no salvage 46,800 407,880 Aug. 11 Purchased for cash 104,400 512,280 ACCOUNT Accumulated Depreciation–Equipment ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 158,760 26 Equipment discarded 46,800 111,960 Dec. 31 Depreciation for year 29,340 141,300 ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 May 1 Issued 20-year bonds 270,000 270,000 ACCOUNT Common Stock $25 par ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 117,000 Dec. 7 Issued 8,000 shares of common stock for $50 per share 200,000 317,000 ACCOUNT Paid-In Capital in Excess of Par–Common Stock ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 558,000 Dec. 7 Issued 8,000 shares of common stock for $50 per share 200,000 758,000 ACCOUNT Retained Earnings ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 20Y2 Jan. 1 Balance 2,585,700 Dec. 31 Net loss 35,320 2,550,380 31 Cash dividends 32,400 2,517,980 Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate net loss, cash outflows, cash payments, decreases in cash, or any negative adjustments.
Managerial Accounting: The Cornerstone of Business Decision-Making
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Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 30BEB: Klynveld Companys balance sheet shows total liabilities of 94,000,000, total stockholders equity of...
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Concept explainers
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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Question
The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:
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1
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Dec. 31, 20Y2
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Dec. 31, 20Y1
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|
2
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Assets
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|
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3
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Cash
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$918,000.00
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$964,800.00
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|
4
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828,900.00
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761,940.00
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5
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Inventories
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1,268,460.00
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1,162,980.00
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6
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Prepaid expenses
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29,340.00
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35,100.00
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|
7
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Land
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315,900.00
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479,700.00
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8
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Buildings
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1,462,500.00
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900,900.00
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9
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(408,600.00)
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(382,320.00)
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10
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Equipment
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512,280.00
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454,680.00
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11
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Accumulated depreciation-equipment
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(141,300.00)
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(158,760.00)
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12
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Total assets
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$4,785,480.00
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$4,219,020.00
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13
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Liabilities and
|
|
|
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14
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Accounts payable (merchandise creditors)
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$922,500.00
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$958,320.00
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15
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Bonds payable
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270,000.00
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0.00
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16
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Common stock, $25 par
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317,000.00
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117,000.00
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17
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Paid-in capital in excess of par—common stock
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758,000.00
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558,000.00
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18
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2,517,980.00
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2,585,700.00
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19
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Total liabilities and stockholders’ equity
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$4,785,480.00
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$4,219,020.00
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The noncurrent asset, noncurrent liability, and stockholders’ equity accounts for 20Y2 are as follows:
ACCOUNT Land
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 479,700 | |||
| Apr. | 20 | Realized $151,200 cash from sale | 163,800 | 315,900 |
ACCOUNT Buildings
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 900,900 | |||
| Apr. | 20 | Acquired for cash | 561,600 | 1,462,500 |
ACCOUNT Accumulated Depreciation–Buildings
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 382,320 | |||
| Dec. | 31 | Depreciation for year | 26,280 | 408,600 |
ACCOUNT Equipment
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 454,680 | |||
| 26 | Discarded, no salvage | 46,800 | 407,880 | |||
| Aug. | 11 | Purchased for cash | 104,400 | 512,280 |
ACCOUNT Accumulated Depreciation–Equipment
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 158,760 | |||
| 26 | Equipment discarded | 46,800 | 111,960 | |||
| Dec. | 31 | Depreciation for year | 29,340 | 141,300 |
ACCOUNT Bonds Payable
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| May | 1 | Issued 20-year bonds | 270,000 | 270,000 |
ACCOUNT Common Stock $25 par
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 117,000 | |||
| Dec. | 7 | Issued 8,000 shares of common stock for $50 per share | 200,000 | 317,000 |
ACCOUNT Paid-In Capital in Excess of Par–Common Stock
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 558,000 | |||
| Dec. | 7 | Issued 8,000 shares of common stock for $50 per share | 200,000 | 758,000 |
ACCOUNT Retained Earnings
| ACCOUNT NO. | ||||||
| Balance | ||||||
| Date | Item | Debit | Credit | Debit | Credit | |
| 20Y2 | ||||||
| Jan. | 1 | Balance | 2,585,700 | |||
| Dec. | 31 | Net loss | 35,320 | 2,550,380 | ||
| 31 | Cash dividends | 32,400 | 2,517,980 |
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate net loss, cash outflows , cash payments, decreases in cash, or any negative adjustments.
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