Question

Problem 4-5B Record transactions, post to the Cash T-account, and prepare the statement of cash flows LO4-7) The following information applies to the questions displayed below.] Peter loves dogs and cats. For the past several years, he has owned and operated Homeward Bound, which temporarily houses pets while their owners go on vacation. For the month of June, the company has the following transactions: 1. Junie 2 Obtain cash by borrowing $19,000 from the bank by signing a note. 2. June 3 Pay rent for the current month, $1,200. 3. June 7 Provide services to customers, 54,900 for cash and $3,200 on account. 4. June 11 Purchase cages and equipment necessary to maintain the animals, $8,100 cash. 5. June 17 Pay employees' salaries for the first half of the month, $6,200. 6. June 22 Pay dividends to stockholders, $1,475. 7. June 25 Receive cash in advance from a customer who wants to house his two dogs (Chance and Shadow) and cat (Sassy) while he goes on vacation the month of July, $1,950. 8. June 28 Pay utilities for the month, $3,000. 9. June 30 Record salaries earned by employees for the second half of the month, $6,200. Payment will be made on July 2.

Answer 1

Cash flows from operating activities
Cash inflows:
From customers (4900+1950)	6850
Cash outflows:
For salaries	(6200)
For rent	(3000)
For utilities	(1200)
Net cash flows from operating activities		(3550)
Cash flows from investing activities
Purchase equipment	(8100)
Net cash flows from investing activities		(8100)
Cash flows from financing activities
Pay dividends	(1475)
Issue of notes payable	19000
Net cash flows from financing activities		17525
Net increase in cash balance		$5875

No.	Transaction	General journal	Debit	Credit
2	2	Service fees expense	59
		Office supplies	590
		Equipment (4700-4400)	300
		Accounts receivable	490
		Cash		1439

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