Question

STATEMENT OF CASH FLOW EXAMPLE PROBLEM JHJ Bookstore first year's transactions are listed below: 1. Contributed cash of $200 to begin business 2. Purchased inventory on account for $2.000 3. Cash sales were $1,200 with cost of sales $600 4. Sales on account were $800 with cost of sales $400 5. Purchased supplies paying cash of 100 6. Paid salaries of 200 7. Purchased equipment costing $600 paying cash of $200 and signing a long-term note for the balance 8. Paid on account payable $700 9. Collections of account receivable $500 10. Paid on long-term note $200 11. Paid dividends of $100 12. Supplies on hand at end of year $50 13. Depreciation expense was $100 14. Sold equipment costing $250 for $100 REQUIRED: Prepare statement of cash flow

Answer 1

JHJ
Cash flow statement(Direct method)
For the first year
Cash flow from operating activities:
Collections from customers	$1,700
Payment for supplies	($100)
Payment for salaries	($200)
Payment to accounts payable	($700)
Net Cash flow from operating activities (A)		$700
Cash flow from investing activities:
Purchase of equipment	($200)
Payment for long-term note	($200)
Proceeds from sale of equipment	$100
Net cash flow from investing activities (B)		($300)
Cash flow from financing activities:
Contribution from owner	$200
Payment of cash dividend	($100)
Net Cash flow from financing activities (C )		$100
Net increase(decrease) in cash		$500
Beginning cash balance		$0
Ending cash balance		$500

Calculations:

Collections from customers
Cash sales	$1,200
Collection from accounts receivable	$500
Total	$1,700