Question
Y ) Sign Language Heari ng Co Ltd Comparative Balance Sheet October 31, 2020, and 2021 2021 2020 Assets Cash and cash equivalent 188,000 200,000
Y)
Sign Language Hearing Co Ltd
Comparative Balance Sheet
October 31, 2020, and 2021
2021
2020
Assets
Cash and cash equivalent
188,000
200,000
Accounts Receivable
230,000
200,000
Inventory
350,000
380,000
Equipment, net
350,000
220,000
Total Assets
1,118,000
1,000,000
Liabilities
Accounts payable
260,000
275,000
Accrued liabilities
95,000
75,000
Income tax payable
65,400
65,400
Bond payable
195,200
105,600
Stockholders' Equity:
Common Stock
155,500
95,300
Retained earnings
650,450
550,300
Treasury stock
(303,550)
(166,600)
Total liabilities and stockholders' equity
1,118,000
1,000,000
Sign Language Hearing Co Ltd
Income Statement
Year Ended October 31,2021
Revenues and gains:
Sales revenue
800,000
Gain on sale of equipment
5,000
Total revenues and gains
805,000
Expenses
Cost of goods sold
480,000
Salary expense
58,500
Depreciation expense
20,000
Rent expense
65,000
Total expenses
623,500
Income before income taxes
181,500
Income tax expense
18,000
Net Profit
163,500
Notes
Purchase of equipment
215,000
Cash receipt from sale of equipment
70,000
Issuance of bonds payable to borrow cash
89,600
Cash receipt from issuance of common stock
60,200
Dividend paid
63,350
Book value of equipment sold
65,000
Purchase of treasury stock. 136,950
Requirement:
In comparison to investing and financing activities, it is often said that cash from operating activities must be the main source of cash to achieve long term success of the company. Do you agree or disagree with this statement?In your own words, give reason or reasons to support your answer taking into consideration the possible consequences of the cash being provided byany of the other two activities over the long run.
Y)
Sign Language Hearing Co Ltd | ||
Comparative Balance Sheet | ||
October 31, 2020, and 2021 | ||
| 2021 | 2020 |
Assets |
|
|
Cash and cash equivalent | 188,000 | 200,000 |
Accounts Receivable | 230,000 | 200,000 |
Inventory | 350,000 | 380,000 |
Equipment, net | 350,000 | 220,000 |
Total Assets | 1,118,000 | 1,000,000 |
Liabilities |
|
|
Accounts payable | 260,000 | 275,000 |
Accrued liabilities | 95,000 | 75,000 |
Income tax payable | 65,400 | 65,400 |
Bond payable | 195,200 | 105,600 |
Stockholders' Equity: |
|
|
Common Stock | 155,500 | 95,300 |
Retained earnings | 650,450 | 550,300 |
Treasury stock | (303,550) | (166,600) |
Total liabilities and stockholders' equity | 1,118,000 | 1,000,000 |
Sign Language Hearing Co Ltd | ||
Income Statement | ||
Year Ended October 31,2021 | ||
Revenues and gains: |
|
|
Sales revenue | 800,000 |
|
Gain on sale of equipment | 5,000 |
|
Total revenues and gains |
| 805,000 |
Expenses |
|
|
Cost of goods sold | 480,000 |
|
Salary expense | 58,500 |
|
Depreciation expense | 20,000 |
|
Rent expense | 65,000 |
|
Total expenses |
| 623,500 |
Income before income taxes |
| 181,500 |
Income tax expense |
| 18,000 |
Net Profit |
| 163,500 |
|
|
|
|
|
|
Notes |
|
|
Purchase of equipment |
| 215,000 |
Cash receipt from sale of equipment |
| 70,000 |
Issuance of bonds payable to borrow cash |
| 89,600 |
Cash receipt from issuance of common stock |
| 60,200 |
Dividend paid |
| 63,350 |
Book value of equipment sold |
| 65,000 |
Purchase of treasury stock. 136,950
Requirement:
In comparison to investing and financing activities, it is often said that cash from operating activities must be the main source of cash to achieve long term success of the company. Do you agree or disagree with this statement?In your own words, give reason or reasons to support your answer taking into consideration the possible consequences of the cash being provided byany of the other two activities over the long run.
|
|
|
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