The comparative balance sheets for Metlock, Inc. as of December 31 are presented below. Metlock, Inc. Comparative Balance Sheets December 31 Assets 2022 2021 Cash $ 66,640 $ 44,100 Accounts receivable 49,000 56,840 Inventory 148,421 139,160 Prepaid expenses 14,974 20,580 Land 142,100 127,400 Buildings 196,000 196,000 Accumulated depreciation—buildings (58,800 ) (39,200 ) Equipment 220,500 151,900 Accumulated depreciation—equipment (44,100 ) (34,300 ) Total $734,735 $662,480 Liabilities and Stockholders’ Equity Accounts payable $ 43,835 $ 35,280 Bonds payable 294,000 294,000 Common stock, $1 par 196,000 156,800 Retained earnings 200,900 176,400 Total $734,735 $662,480 Additional information: 1. Operating expenses include depreciation expense of $41,160 ($19,600 of depreciation expense for buildings and $21,560 for equipment). 2. Land was sold for cash at book value. 3. Cash dividends of $11,760 were paid. 4. Net income for 2022 was $36,260. 5. Equipment was purchased for $90,160 cash. In addition, equipment costing $21,560 with a book value of $9,800 was sold for $7,840 cash. 6. 39,200 shares of $1 par value common stock were issued in exchange for land with a fair value of $39,200. Prepare a statement of cash flows for the year ended December 31, 2022, using the indirect method.
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.
The comparative balance sheets for Metlock, Inc. as of December 31 are presented below.
|
Metlock, Inc.
Comparative Balance Sheets December 31 |
||||||
|---|---|---|---|---|---|---|
|
Assets
|
2022
|
2021
|
||||
|
Cash
|
$ 66,640
|
$ 44,100
|
||||
|
Accounts receivable
|
49,000
|
56,840
|
||||
|
Inventory
|
148,421
|
139,160
|
||||
|
Prepaid expenses
|
14,974
|
20,580
|
||||
|
Land
|
142,100
|
127,400
|
||||
|
Buildings
|
196,000
|
196,000
|
||||
|
|
(58,800
|
)
|
(39,200
|
)
|
||
|
Equipment
|
220,500
|
151,900
|
||||
|
Accumulated depreciation—equipment
|
(44,100
|
)
|
(34,300
|
)
|
||
|
Total
|
$734,735
|
$662,480
|
||||
|
Liabilities and
|
||||||
|
Accounts payable
|
$ 43,835
|
$ 35,280
|
||||
|
Bonds payable
|
294,000
|
294,000
|
||||
|
Common stock, $1 par
|
196,000
|
156,800
|
||||
|
|
200,900
|
176,400
|
||||
|
Total
|
$734,735
|
$662,480
|
Additional information:
| 1. | Operating expenses include depreciation expense of $41,160 ($19,600 of depreciation expense for buildings and $21,560 for equipment). | |
| 2. | Land was sold for |
|
| 3. | Cash dividends of $11,760 were paid. | |
| 4. | Net income for 2022 was $36,260. | |
| 5. | Equipment was purchased for $90,160 cash. In addition, equipment costing $21,560 with a book value of $9,800 was sold for $7,840 cash. | |
| 6. | 39,200 shares of $1 par value common stock were issued in exchange for land with a fair value of $39,200. |
Prepare a statement of
|
Metlock, Inc.
Statement of Cash Flows Choose the accounting period December 31, 2022For the Year Ended December 31, 2022For the Quarter Ended December 31, 2022 |
||
|---|---|---|
|
Select an opening name for section one Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash used by Financing ActivitiesNet Cash used by Investing ActivitiesNet Cash used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
|
||
|
Select an item Acquired Land by Issuance of Common StockDecrease in Accounts PayableDecrease in Accounts ReceivableDecrease in InventoryDecrease in Prepaid ExpensesDepreciation ExpenseIncrease in Accounts PayableIncrease in Accounts ReceivableIncrease in InventoryIncrease in Prepaid ExpensesGain on Disposal of Plant AssetsLoss on Disposal of Plant AssetsNet IncomePayment of Cash DividendsPurchase of EquipmentSale of EquipmentSale of Land
|
$Enter a dollar amount
|
|
|
Adjustments to reconcile net income to
|
||
|
Selet an opening subsection name Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash used by Financing ActivitiesNet Cash used by Investing ActivitiesNet Cash used by Operating ActivitiesNet Decrease in CashNet Increase in CashNoncash Investing and Financing Activities
|
||
|
Select an item Acquired Land by Issuance of Common StockDecrease in Accounts PayableDecrease in Accounts ReceivableDecrease in InventoryDecrease in Prepaid ExpensesDepreciation ExpenseIncrease in Accounts PayableIncrease in Accounts ReceivableIncrease in InventoryIncrease in Prepaid ExpensesGain on Disposal of Plant AssetsLoss on Disposal of Plant AssetsNet IncomePayment of Cash DividendsPurchase of EquipmentSale of EquipmentSale of Land
|
$Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount | |
|
Select an item
|
Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Enter a total amount for this subsection
|
||
|
Select a closing name for section one
|
Enter a total amount for section one
|
|
|
Select an opening name for section two
|
||
|
Select an item
|
Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Select a closing name for section two
|
Enter a total amount for section two
|
|
|
Select an opening name for section three
|
||
|
Select an item
|
Enter a total amount for section three
|
|
|
Select an item
|
Enter a total amount for three sections
|
|
|
Select an item
|
Enter a dollar amount
|
|
|
Select a closing name for three sections
|
$Enter a total of the two previous amounts
|
|
|
Select an opening name for section four
|
||
|
Select an item
|
$Enter a dollar amount
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
