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Solo Inc. is a publicly listed furniture company. The company is well known for manufacturing furniture for major hospitals and organizations in the United States and Europe. The company has experienced significant growth in recent years due to the increased demand for its quality products. Although the company is very profitable and is determined to maintain its profitability trend, its strategic focus in the last three years has been to manage its liquidity. The company has consulted you to analyze its financial data to determine if it is managing its liquidity effectively. Cash Flow Statement: Use the information below to construct your cash flow statement. The information below is the total amounts of all the components that comprise operating, investing, and financing activities. For example, there is no need to look for items that make up operating activities. Use the net cash provided by operating activities for December 31 as the total instead. Same for investing and financing. Net cash provided by operating activities – December 31 Net cash used by investing activities – December 31 Net cash used by financing activities – December 31 Cost of Goods Sold: You would need two line items in the 2021 account listing to compute your cost of goods sold. Cost of goods available for sale is not the same as cost of goods sold. You would need cost of goods sold to construct your income statement. Depreciation/Accumulated Depreciation: Depreciation belongs in the income statement. Accumulated depreciation belongs in the balance sheet. Retained Earnings and Cash Beginning Balances: Use the December 1 as the beginning balances. Some of you are wondering why it is not January 1. In accounting, the balances in the balance sheet are rolled forward from prior period (previous month). The December 1 balance is a result of balances rolled from November. The November balances were rolled from October and so on and so forth.
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