Question

The following information applies to the questions displayed below) Part 4 of 5 Pratt Corp. started the Year 2 accounting period with total assets of $34.000 cash. $14,000 of liabilities, and $9.000 of retained earnings. During the Year 2 accounting period, the Retained Earnings account increased by $11,550. The bookkeeper reported that Pratt paid cash expenses of $28,000 and paid a $2.400 cash dividend to stockholders, but she could not find a record of the amount of cash revenue that Pratt received for performing services. Pratt also paid $7,000 cash to reduce the ability owed to a bank, and the business acquired $7700 of additional cash from the issue of common stock. Assume all transactions are cash transactions 166 Problem 1-33A Part d d. Prepare a statement of cash flows for the Year 2 accounting period. (Cash outflows should be indicated with a minus sign.) PRATT CORP. Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities References Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net cash flow from financing activiti Ending cash balance

Answer 1

Cash flow statement:

PRATT CORP.
Statement of Cash Flows
For the year ended December 31, Year 2
Cash flows from operating activities:
Cash expenses	($28,000)
Cash revenues	$41,950
Net cash flow from operating activities (i)		$13,950
Cash flows from investing activities (ii)		$0
Cash flows from financing activities:
Issuance of common stock	$7,700
Paid cash dividends	($2,400)
Paid for the bank loan	($7,000)
Net cash flow from financing activities (iii)		($1,700)
Net increase(decrease) in cash (i+ii+iii)		$12,250
Beginning cash balance		$34,000
Ending cash balance		$46,250

Calculations:

Cash revenues:

Increase in retained earnings	$11,550
Add: Dividends	$2,400
Net income	$13,950
Add: Expenses	$28,000
Revenues	$41,950