You are provided with the following information taken from Sage Hill Inc's March 31, 2027, balance sheet Cash Accounts receivable Inventory Property, plant, and equipment, net of depreciation Accounts payable Common stock Retained earnings 1 2 3 4 5. 6. 7 Additional information concerning Sage Hill Inc is as follows Gross profit is 24% of sales Actual and budgeted sales data March (actual April (budgeted) April 43.620 $12.280 $47,100 72,700 562.460 23.120 37,100 123,400 22,910 152,900 Sales are both cash and credit. Cash collections expected in April are March $18.840 (40% of 547,100) 160% of $72,700 12.320 Half of a month's purchases are paid for in the month of purchase and half in the following month. Cash disbursements expecte Purchases March Purchases April $22.910 28.910 $51.820 Cash operating costs are anticipated to be $12.110 for the month of April. Equipment costing $2.530 will be purchased for cash in April The company wishes to maintain a minimum cash balance of $12.240 An open line of credit is available at the bank All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 13% per year, and interest expense is accrued at the end of the month and paid in the following month Prepare a cash budget for the month of April. Determine how much cash Sage Hill Inc. must borrow.or can repay in April ( not le Payment of April Cash Purchases Add V B Collections from Customers Total Available Cash Less V B Cash Receipts Payment of March Purchases Payment of April Cash Purchases Cash Operating Costs Cash Disbursements Equipment Purchase Total Disbursements Financing Add Excess (Deficiency) of Available Cash Over Disbursements Y Lass V Borrowings Repayments SAGE HILL INC. Cash Budget For the Month Ending April 30, 2027 V Ending Cash Balance V
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.
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