Question

The following events occurred in April for Main Squeeze.

1. You put $3,000 cash into the company and signed over your car (with a value of $5,000). In exchange the company issued 8,000 shares to you.

2. Purchased a lemonade stand/trailer paying $600 cash on signing and financing the remainder with a loan over 5 years. The stand's purchase price is $6,000.

3. Entered into a 5-year seasonal lease for prime boardwalk space with the city of saint john. Payments are $500 monthly from May to September.

4. Purchased a new juicer machine for $1,500 cash, and a water filtration system for $800 signing a short term note payable due in 4 months,

5. Ordered $500 worth of inventory of (lemons, sugar and cups) to be received May 3.

6. Hired a part-time employee for $1,500 per month who will start in May.

The remaining transactions occurred over the rest of the summer (May through September);

7. Paid for $260 worth of advertisements all of which ran during the summer.

8. Sold $10,920 worth of lemonade, receiving $9,600 in cash with the rest owed by customers from special catering events.

9. Paid $500 for inventory ordered in May, and ordered $3,200 more inventory throughout the season of which all was paid for except $450 outstanding at the end of  

10. Made monthly lease payments of $500 from May to September.

11. Paid $850 on note payable, $50 of which was interest.

12. Paid a part-time employee $1,500 per month for May, June, July, and August. September pay is still outstanding.  

13. Paid deposit for next years lease of $250

14. Sold prepaid gift cards totaling $650 to customers to use the next season.

The transactions above have already been recorded in the General Journal. Using this information, please create, in good form, a cash flow statement, using the direct method, for the year ended December 31, 2021. Please ensure you separate the statement by activity. Operating, Financing, Investing.

Answer 1

Statement of Cash Flow for the year ended 31 Dec, 2021
Operating
Receipts
Sales	9600
Prepaid Gift Cards Sale	650
	10250
Payments
Part Time Employee Salary	6000	1500*4
Monthly Lease Payments	2500	`500*5
Payment for Inventory	3250	500+3200-450
Paid for advertisement	260
	12010
Net Outflow	-1760
Financing
Receipts	0
Payments
Note Payable paid	800	850-50
Interest on Note Payable	50
	850
Net Outflow	-850
Investing
Receipts	0
Payments
Investment in shares of a company	3000
Purchase of Lemonade stand/trailer	600
Deposit for next years lease	250
New Juicer Machine	1500
	5350
Net Outflow	-5350
Total Cash Outflow	-7960