The records of Rangler Paper Co. reflect the select data provided below for the reporting period ended 31 December 20X5 Statement of Financial Position Data Paid cash dividend Established restricted construction cash fund (a long-term investment) to build a new building Increased inventory of merchandise Borrowed on a long-term note Acquired five acres of land for a future site for the company; paid in full by issuing 3,150 shares of Rangler common shares, when the quoted market price per share was $15 Increase in prepaid expenses Decrease in accounts receivable Payment of bonda payable in full at book value Increase in accounts payable Cash from disposal of old operational assets (sold at book value) Decrease in rent receivable Statement of Comprehensive Income Sales revenue Rent revenue Cost of goods sold Depreciation expense Remaining expenses Net earnings and comprehensive income $403,000 11,500 (193,000) (21,500) (98,500) $101,500 $13,000 61,500 15,500 26,500 47,250 3,300 7,300 99,500 5,600 12,300 2,600 Required: Prepare the SCF using the indirect method for operating activities. Group all changes in non-cash working capital in operations as one amount. Separate disclosure of cash paid for interest and income tax and investment income is not required. Assume a beginning cas balance of $63,500. (Enter your answers in thousands of dollars. Deductible amounts and Cash outflows should be indicated with minus sign)
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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