UMA COMPANY UMA COMPANY Balance Sheets Income Statement December 31, 2019 and 2018 For Year Ended December 31, 2019 2019 2018 Sales.. $446,100 Cost of goods sold ... $22,300 Assets Cash $ 43,050 $ 23,925 Other operating expenses 120,300 Depreclation expense 25,500 (368,100) 78,000 Accounts recelvable 34,125 39,825 Inventory . Prepald expenses 156,000 146,475 3,600 1,650 Other galns (losses) Total current assets. 236,775 211,875 Loss on sale of equlpment 3,300 Equipment ..... Accum. depreclation-Equlpment 135,825 146,700 Loss on retirement of bonds.. 825 (4,125) Income before taxes 73,875 (61,950) (47,550) $310,650 $311,025 Income tax expense (13,725) $ 60,150 Total assets Net Income Llablitles $ 28,800 $ 33,750 Accounts payable Income taxes payable 5,100 4,425 Dividends payable 4,500 Additional Information Total current llabilities. 33,900 42,675 a. Equipment costing $21,375 with accumulated deprecla- tlon of $11,100 Is sold for cash. Bonds payable... 37,500 Total llabilitles . 33,900 80,175 b. Equipment purchases are for cash. c. Accumulated Depreclation Is affected by depreclation expense and the sale of equipment. Equlty Common stock, $10 par .. Retalned earnings .. Total llabilitles and equlty 168,750 168,750 d. The balance of Retalned Earnings Is affected by dlvidend 62,100 $310,650 $311,025 108,000 declarations and net Income. e. All sales are made on credit. f. All Inventory purchases are on credit. g. Accounts Payable balances result from Inventory purchases. h. Prepald expenses relate to "other operating 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.
Comparative balance sheets, an income statement, and additional information follow. 1. Prepare a statement of cash flows using the indirect method for year 2019. 2.B Prepare a statement of cash flows using the direct method for year 2019.
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