question archive What is the purpose of the statement of cash flows? Prepare MRRC's income statement for the year ended December 31, 2024
What is the purpose of the statement of cash flows? Prepare MRRC's income statement for the year ended December 31, 2024
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What is the purpose of the statement of cash flows? Prepare MRRC's income statement for the year ended December 31, 2024. Use the single-step format, with all revenues listed together and all expenses listed together. Prepare MRRC's balance sheet at December 31, 2024. Prepare MRRC's statement of cash flows using the indirect method for the year ended December 31, 2024.
a. On January 1, 2024, MRRC issued no par common stock for $525,000. b. Early in January, MRRC made the following cash payments: 1. For store fixtures, $52,000 2. For merchandise inventory. $250,000 3. For rent expense on a store building, $10,000 c. Later in the year, MRRC purchased merchandise inventory on account for $238,000. Before year-end, MRRC paid $158,000 of this accounts payable. d. During 2024, MRRC sold 3,000 units of merchandise inventory for $225 each. Before year-end, the company collected 85% of this amount. Cost of goods sold for the year was $340,000, and ending merchandise inventory totaled $148,0 e. The store employs three people. The combined annual payroll is $82,000, of which MRRC still owes $4,000 at year-end. f. At the end of the year, MRRC paid income tax of $18,000. There are no income taxes payable. g. Late in 2024, MRRC paid cash dividends of $37,000. h. For store fixtures, MRRC uses the straight-line depreciation method, over five years, with zero residual value.
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STATEMENT OF CASH FLOWS
DEFENITION OF CASH FLOW STATEMENT :
Statement of cash flows or otherwise known as cash flow statement, is an financial statement prepared to know the changes in cash and cash equivalents of an business organization, resulting from operating,investing and financial activities of an enterprise during a period.
PURPOSE OF CASH FLOW STATEMENT :
The main purpose for the preparation of cash flow statement is to know the cash inflows and cash outflows of an enterprise during a particular period. Yet another major purpose of such preparation is to analyze the liquidity and long term solvency of the company. There are other purposes too:
- To know the cash movements of enterprise - Information about the financial well-being of organization -To know liquidity status - Legal requirements etc.
