Question

Complete a Statement of Cash Flows Acquired cash of $225,000 from the issue of common stock....

Complete a Statement of Cash Flows

  1. Acquired cash of $225,000 from the issue of common stock.

  2. Borrowed $175,000 cash from the bank on April 1, 2018.

  3. Paid $285,000 cash to purchase fixed assets - land that cost $65,000

    and a building that cost $220,000.

  4. Earned and recognized consulting revenue on account for $345,000

  5. Collected $200,000 on the accounts receivable during the year

  6. Incurred $150,000 of consulting expenses on account during the year.

  7. Paid $125,000 on the accounts payable during the year.

  8. Paid $92,500 cash for other operating expenses during the year.

  9. Paid the company owners $5,300 of dividends.

  10. Received $21,750 cash for services to be performed in the future.

  11. On June 1, paid $10,500 cash in advance for a one-year lease to rent office space.

  12. Paid $9,450 cash for salaries expense.

Information for December 31, 2018

ADJUSTING ENTRIES:

  1. Completed $11,350 of services performed described in Transaction 10.

  2. Adjust Prepaid Rent account for rent used up during the year. (7

    months)

  3. Use the straight-line method to depreciate the building purchased in

    Transaction 3. Management estimated that it had a useful life of 20

    years. Record the building depreciation.

  4. Recognized that $3,647 of Salary Expense has been incurred on

    December 31. The employees are owed this for the services they provided in December but will not be paid to them until January. Record the year end accrual for salary expense.

  5. Accrued interest expense for loan in # 2. Terms: interest rate 10%, in one year. (Loan was outstanding 9 months during 2018).

Homework Answers

Answer #1
Statement of Cash Flows: Amount ($)
Cash Flow from Operating activities:
Collections from accounts receivable 200000
Payment to Accounts Payable -125000
Payment for other operating expenses -92500
Advance Received 21750
Rent paid in advance -10500
Paid for salaries expense -9450
-15700
Cash Flow from Investing Activities:
Borrowings from bank 175000
Purchase of Fixed Assets -285000
-110000
Cash Flow from Financing Activities:
Issue off Common Stock 225000
Payment of Dividend -5300
219700
Net Cash flow during the year 94000
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