Question

! Required information Problem 3-32A Comprehensive problem: single cycle LO 3-1, 3-2, 3-3, 3-4 [The following information applies to the questions displayed below.] The following transactions pertain to Smith Training Company for Year 1: 30 Established the business when it acquired $48,000 cash from the issue Jan. of common stock. Feb. 1 Paid rent for office space for two years, $15,400 cash. Apr. 10 Purchased $770 of supplies on account. 1 Received $26,000 cash in advance for services to be provided over the July next year. 20 Paid $578 of the accounts payable from April 10. Aug. 15 Billed a customer $10,300 for services provided during August. Sept. 15 Completed a job and received $3,400 cash for services rendered. Oct. 1 Paid employee salaries of $32,500 cash. 15 Received $8,800 cash from accounts receivable. Nov. 16 Billed customers $37,000 for services rendered on account. Dec. 1 Paid a dividend of $800 cash to the stockholders. 31 Adjusted records to recognize the services provided on the contract of July 1. 31 Recorded $2,500 of accrued salaries as of December 31. 31 Recorded the rent expense for the year. (See February 1.) 31 Physically counted supplies; $120 was on hand at the end of the period.

Answer 1

3-32 A

	Cash flow Statement
Cash flow from operating activities ( See Note Below)
Received from customers	38200
Paid for expenses	(47900)
Paid for purchases	(578)
Net Cash flow from operating Activites		(10278)
Cash flow from Investing Activities		0
Cash flow from Financing Activity
Received from Stock	48000
Dividend paid	(800)
Net cash flow from Financincg Activites		47200
Net Change in cash		36922
Plus : Beginning Cash balance		0
Ending Cash balance		36922

Cash flow from operating Activites

	Receipt	Payment
Rent paid		15400
Service Advance	$26000
Paid Account payable		$578
Cash receipt for services	$3400
Payment of employees salary		$32500
Receipt cash on account Receivable	$8800
Net	38200	48478

Cash flow statement is dividend into three activites , Operating which consider activities relating to business day to day operation and can be calculated by direct or indirect method , Investing Activities are related to Purchase and sales of Assets or Investment and last is financing Activities which is related to fund raise through banks , debentures , share etc.

1) Issue of Common stock will imcrease cash and are financing activity , will be shown under Cashflow from financing activity

2) Payment of office rent is operating expenses and hence will come under operating activities

3) Purchase on account will not affect cash, on payment it will be refelcted under operating activities

4) Receive advance , though service will not recognised in Income statement but as cash inflow is there it will come under operating activities

5) Billing customer will not generate any cash , will not affect cashflow statement

6) Adjusting entry relating to 31 , will not generate any cash , ie Salary payable ,recording of Rent expenses and Inventory .

7) Dividend are paid to stock holder , for common stock issue and hence it will come under financing activity.

If any issue relating to any entry please ask on comment section