. The Balance sheet reveals the firm's assets, liabilities and owners' equity (net worth). But the...

. The Balance sheet reveals the firm's assets, liabilities and owners' equity (net worth). But the cash position of the company also forms a very prominent position in order to know the liquidity of the company. The balance sheet items (in OMR) are taken from Magrib Ltd. for the years 2018 and 2019 respectively:

	2018	2019
Assets
Furniture, Equipment and buildings	100,060	81,040
Current Assets
Inventory	29,300	14,480
Sundry debtors	12,750	15,870
Bank	22,760	9,950
Short term loan	12,750	15,870
Total Assets	177,620	137,210
Equity and Liabilities
Capital and Reserves
Ordinary Share Capital	70,000	50,000
Revaluation reserves	10,000	7,000
Share Premium	11,000	7,000
Retained Earnings	25,700	17,240
	116,700	81,240
Non-Current Liabilities
12% Long term loan	5,250	10,500
Current Liabilities
Sundry creditors	17,900	14,920
Proposed Dividend	10,500	7,500
Taxation	27,270	23,050
	55,670	45,470
Total Equity and Liabilities	177,620	137,210

Additional Information

Interest paid on long term loan was RO1950 during the year

Depreciation on the non-current Asset was RO 7440

Building with a book value of RO11,580 was sold for a loss of RO1400 during the year

From the above Balance sheet items, you are required to calculate: a) Profit before Interest and Tax and prepare b) Cash flow statement for the year 2019
In Cash flow statement, certain items are added and certain items are deducted. From the Cash flow statement, you have prepared, comment on the reasons for adding or deducting those items.

Expert Solution

A. Calculation of
a) Profit before interest & Tax
Retained earnings 2019	17240
Add: Proposed dividend 2019	7500
Add: Taxation 2019	23050
Add: Interest paid	1950
Less: retained earnings 2018	25700

Profit before Interest & Tax	24040


Cashflow from operating activities
Particulars	Amounts
Net profit as per P& L A/c	$ 22,090
Add: Non cash items
Depreciation exp	$ 7,440
Ammortisation exp
Loss on sale	$ 1,400

Less: Non cash items


Add: Increase in Current liab & decrease in current assets
Increase in accrued expenses
Increase in accounts payable
Increase in unearned revenue
Decrease in inventory	$ 14,820


Less: Decrease in Current liab & Increase in current assets
Increase in sundry debtors	$ -3,120
Increase in short term loan	$ -3,120
Decrease in sundry creditors	$ -2,980


Cashflow before Tax	$ 36,530
Less: Tax paid	$ -23,050

Cashflow from operations	$ 59,580


Cashflow from investing activities
Particulars	Amounts
Purchase of Furniture, Equioment & bui	$ -23,460



Cashflow from investing activities	$ -23,460



Cashflow from Financing activities
Particulars	Amounts
Share capital	$ -20,000
Share premium	$ -4,000
Long term loan	$ 5,250
Dividend paid

Cashflow from Financing activities	$ -18,750

Net change in cash & cash equivalents	$ -12,810



Opening balance of cash & cash equivalents	$ 22,760


Closing balance of cash & cash equivalents	$ 9,950

Please Like the solution if satisfied with the answer and if any query please mention it in comments...thanks

ekkarill92 answered 1 year ago

define balance sheet assets liabilities equity

define balance sheetassetsliabilitiesequity

1.The fundamental rule of the balance sheet is assets equals liabilities plus owners’ equity. True False...

1.The fundamental rule of the balance sheet is assets equals liabilities plus owners’ equity. True False 2.Owners’ equity are the things a business owns, such as cash, inventory, and money owed from customers. True False 3.The cumulative profits of the business since inception are known as retained earnings. True False 4.Assets and liabilities on a balance sheet are always presented at current market value. True False 5.The main sections of a balance sheet are: Assets, liabilities, and net profits Assets,...

1. The balance sheet consists of assets and liabilities and equity. With a focus on liabilities,...

1. The balance sheet consists of assets and liabilities and equity. With a focus on liabilities, discuss the connectedness of these three components. 2. Discuss the components needed to determine the present value of a noncurrent liability. 3. Discuss the relationship between the income statement and the shareholders' equity section of the balance sheet. 4. Discuss the purpose of other comprehensive income and accumulated other comprehensive income. 5. Compare and contrast book value per share and market capitalization. 6. Evaluate...

Create a balance sheet (assets, liabilities, equity, liabilities + equity) for Tech Co using the following...

Create a balance sheet (assets, liabilities, equity, liabilities + equity) for Tech Co using the following information: Adjusted Trial Balance As of December 31, 2014 Debits Credits Cash 278,554,562 Accounts Receivable 128,102,723 Allowance for Doubtful Accounts 5,764,623 Inventory 1,438,773,206 Merchandise Purchases 2,363,146,864 Buildings 198,895,751 Accumulated Depreciation - Building 84,843,130 Equipment 104,891,998 Accumulated Depreciation - Equipment 42,768,575 Trademark 80,000 Accounts Payable 1,243,547,398 Interest Payable 2,258,179 Taxes Payable 9,015,728 Notes Payable 160,391,997 Bonds Payable 200,000 Premium on Bonds Payable 3,600 Dividends Payable...

VITALSTATISTIX, INC. 2017 Balance Sheet Items Assets Liabilities and Owners’ Equity Cash $200 Accounts Payable $200 ...

VITALSTATISTIX, INC. 2017 Balance Sheet Items Assets Liabilities and Owners’ Equity Cash $200 Accounts Payable $200 Accounts Receivable 400 Notes Payable 100 Inventory 650 Long-Term Debt 1,050 Net Plant and Equipment 2,400 Common Stock 500 Paid-in Surplus 1,500 Retained Earnings 300 VITALSTATISTIX, INC. 2017 Income Statement Sales $2,700 Cost of Goods Sold 800 Depreciation 100 Earnings Before Interest and Taxes $1,800 Interest Paid 150 Taxable Income $1,650 Taxes 550 Net Income $1,100 13. Vitalstatistix, Inc. has 500 shares of common...

A company’s Balance Sheet (in millions) Assets Liabilities & Equity Current $20 Net Fixed $80 Bonds...

A company’s Balance Sheet (in millions) Assets Liabilities & Equity Current $20 Net Fixed $80 Bonds ($1000 Par) 40 Preferred stocks ($100 Par) 20 Total $100 Common Stock ($1 par) 40 Total $100 The company's bonds have 15 years to mature, pay 12% coupon rate semi-annually and comparable bonds' YTM is 14%. The market price of the common stock is $3.25 per share. The most recent dividend on the common stock was $0.85. The company’s applicable tax rate is 30%....

Think about this: assets equal liabilities plus equity. This is the balance sheet and if it...

Think about this: assets equal liabilities plus equity. This is the balance sheet and if it balances, and you’ve audited it, then the income statement must be reasonably stated. Right? What’s the point in auditing the income statement if you’ve audited everything else on the balance sheet – and it all balances. In fact, you’ve probably noticed that the focus of all the audit work we’ve studied has been on the balance sheet. Please consider and discuss the reasons why...

Higginbotham, INC Balance Sheet ($000) Assets Liabilities and Stockholder’s Equity Cash

Higginbotham, INC Balance Sheet ($000) Assets Liabilities and Stockholder’s Equity Cash $ 1,500 Marketable Securities 2,500 Accounts Receivable 15,000 Inventory 33,000 Tot. Curr. Assets $52,000 Fixed Assets (net) 35,000 Total Assets $87,000 Accounts Payable $12,500 Notes Payable 12,500 Tot. Current Liab. $25,000 Long-term Debt 22,000 Total Liabilities $47,000 Common Stock (par) 5,000 Paid-in Capital 18,000 Retained Earnings 17,000 Total Stock Equity $40,000 Tot Liab. And Stockholder Equity $87,000 Higginbotham, INC Income Statement ($000)...

1) With respect to a balance sheet with categories Assets, Liabilities, and Equity, construct a simple...

1) With respect to a balance sheet with categories Assets, Liabilities, and Equity, construct a simple mathematical equation that links the three. How is the Income Statement different from the Statement of Cash Flows? How does accrual accounting partially explain this? Which one is the most important to discerning the company’s true operating story and then forecasting its future prospects?

Balance sheet: What is the Financial position of the company's Assets, Liabilities, and Stockholder's Equity?

Question