Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 43,000 shares of common stock in exchange for $430,000 in cash.
2. Purchased equipment at a cost of $66,000. $23,000 cash was paid and a note payable to the seller was signed for the balance owed.
3. Purchased inventory on account at a cost of $116,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $133,000. The cost of the goods sold was $83,000.
5. Paid $6,300 in rent on the warehouse building for the month of March.
6. Paid $7,300 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
7. Paid $83,000 on account for the merchandise purchased in 3.
8. Collected $68,000 from customers on account.
9. Recorded depreciation expense of $2,300 for the month on the equipment.

Required:

1. Analyze each transaction by indicating the cash effect and classify each as a financing, investing, and/or operating activity (a transaction can represent more than one type of activity).

2. Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was $53,000.

Analyze each transaction by indicating the cash effect and classify each as a financing, investing, and/or operating activity (a transaction can represent more than one type of activity). (Amounts to be deducted should be indicated with a minus sign. If there is no cash effect, leave cell blank.)

	Operating Investing Financing 1. 2. 3. 4. 5. 6. 7. 8. 9. =

Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was $53,000. (Amounts to be deducted should be indicated with a minus sign.)

WAINWRIGHT CORPORATION Statement of Cash Flows For the Month Ended March 31, 2021 Cash flows from operating activities: Net cash flows from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Net increase in cash Cash and cash equivalents, March 1 Cash and cash equivalents, March 31 Noncash investing and financing activities: Cost of equipment Cash paid Note issued

Answer 1

Answer is given below