Satum Company Income Statement for year ended Dec. 31, 2018 $238,000 153,000 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Depreciation Expense Insurance Expense Salaries Expense Other Operating Expenses Total Operating Expenses Operating Income Other Revenue and (Expenses): 85,000 $14,400 12,000 42,600 11,100 80,100 4,900 Gain on Sale of Land 4,800 Interest Expense Total Other Revenue and Expenses Income Before Income Tax Income Tax Expense (3,500) 1,300 6,200 1,860 $ 4,340 Net Income Additional Information: 1. Saturn Company sold land with an original cost of $10.000, for $14,800 cash. 2. A new parcel of land was purchased for $20,000, in exchange for a note payable. 3. Plant assets were purchased for $40,000 cash. 4. Saturn declared and paid a $440 cash dividend to shareholders. 5. Saturn issued common stock in exchange for S45,000 cash. Prepare a cash flow statement for Saturm Company using the indireet method for the year ended 31 December 2018
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.
Prepare a statement of
![[Question 1]
Saturn Company
Comparative Balance Sheet
2018
2017
Assets
Cash
Accounts Recelvable
Prepaid Insurance
Inventory
Land
Plant Assets
$ 47,500
21,500
2,500
48,000
20.000
230,000
(85,500)
$284.000
S 24,300
26,000
1,800
45,500
10,000
190,000
(71,100)
$226,500
Accumulated Depreciation
Total Assets
Llabilities and Equity
Liabilities:
Accounts Payable
Salaries Payable
Notes Payable
$ 17,200
1,900
85,000
$ 19,000
1,500
75,000
95,500
Total Liabiltes
104.100
Equity
Common Stock
Retained Earnings
Total Equity
Total Liabilities and Equity
115.000
64.900
70,000
61,000
179.900
00000
$284.000
$226,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fccbb213c-415b-48c3-830c-f78c17784d1d%2F6976925a-0dfa-4d26-9a8d-8215781555ce%2Fs9igwmn_processed.jpeg&w=3840&q=75)
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