Use the following excerpts from Yardley Company’s financial information. 2018 Income Statement Balance Sheets Sales $455,000 Cost of Goods Sold (221,500) Operating Expenses, other than Depreciation Expense (60,600) Depreciation Expense (21,000) Gain on Sale of Plant Assets 23,500 Net Income $175,400 Dec. 31,2018 Cash $323,450 Accounts Receivable 39,750 Inventory 31,000 Accounts Payable 17,550 Accured Liabilities 3,500 Dec. 31, 2017 Cash $133,500 Accounts Receivable 36,500 Inventory 35,000 Accounts Payable 19,550 Accured Liabilities 2,200 Additional Information: Plant assets were sold for $40,000; book value $16,500. Dividends of $23,000 were declared and paid. Prepare a statement of cash flows (indirect method) for the year 2018. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments. Yardley Company Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2018 Operating Activities: $fill in the blank 2 Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities: $fill in the blank 4 fill in the blank 6 Changes in Current Assets and Liabilities: fill in the blank 8 fill in the blank 10 fill in the blank 12 fill in the blank 14 fill in the blank 15 Net Cash Flow from Operating Activities $fill in the blank 16 Cash Flow from Investing Activities: $fill in the blank 18 Net Cash Flow from Investing Activities fill in the blank 19 Cash Flow from Financing Activities: $fill in the blank 21 Net Cash Flow from Financing Activities fill in the blank 22 $fill in the blank 24 fill in the blank 26 $fill in the blank 28
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.
Use the following excerpts from Yardley Company’s financial information.
| 2018 Income Statement |
Balance Sheets |
||
| Sales | $455,000 | ||
| Cost of Goods Sold | (221,500) | ||
| Operating Expenses, other than |
(60,600) | ||
| Depreciation Expense | (21,000) | ||
| Gain on Sale of Plant Assets | 23,500 | ||
| Net Income | $175,400 | ||
| Dec. 31,2018 | |||
| Cash | $323,450 | ||
| 39,750 | |||
| Inventory | 31,000 | ||
| Accounts Payable | 17,550 | ||
| Accured Liabilities | 3,500 | ||
| Dec. 31, 2017 | |||
| Cash | $133,500 | ||
| Accounts Receivable | 36,500 | ||
| Inventory | 35,000 | ||
| Accounts Payable | 19,550 | ||
| Accured Liabilities | 2,200 | ||
| Additional Information: | |||
| Plant assets were sold for $40,000; book value $16,500. | |||
| Dividends of $23,000 were declared and paid. |
Prepare a statement of cash flows (indirect method) for the year 2018. Use the minus sign to indicate
| Yardley Company | ||
| Statement of Cash Flows (Indirect Method) | ||
| For the Year Ended December 31, 2018 | ||
| Operating Activities: | ||
| $fill in the blank 2 | ||
| Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities: | ||
| $fill in the blank 4 | ||
| fill in the blank 6 | ||
| Changes in Current Assets and Liabilities: | ||
| fill in the blank 8 | ||
| fill in the blank 10 | ||
| fill in the blank 12 | ||
| fill in the blank 14 | fill in the blank 15 | |
| Net Cash Flow from Operating Activities | $fill in the blank 16 | |
| Cash Flow from Investing Activities: | ||
| $fill in the blank 18 | ||
| Net Cash Flow from Investing Activities | fill in the blank 19 | |
| Cash Flow from Financing Activities: | ||
| $fill in the blank 21 | ||
| Net Cash Flow from Financing Activities | fill in the blank 22 | |
| $fill in the blank 24 | ||
| fill in the blank 26 | ||
| $fill in the blank 28 |
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