Concepts for Analysis 23-2 Teresa Ramirez and Lenny Traylor are examining the fo

Question

Concepts for Analysis 23-2 Teresa Ramirez and Lenny Traylor are examining the following statement of cash flows for Vaughn Clothing Store's first year of operations. VAUGHN CLOTHING STORE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JANUARY 31, 2017 Sources of cash From sales of merchandise From sale of common stock From sale of investment From depreciation From issuance of note for truck From interest on investments 385,500 374,500 124,500 84,500 31,200 9,100 1,009,300 Total sources of cash Uses of cash For purchase of fixtures and equipment For merchandise purchased for resale For operating expenses (including depreciation) For purchase of investment For purchase of truck by issuance of note For purchase of treasury stock For interest on note 341,000 258,500 172,400 99,400 31,200 11,100 3,120 916,720 Total uses of cash

Explanation / Answer

I agree with Lenny.

This is because that the year was operating failure.

You have entered the wrong amount in Purchase of Treasury Stock as 111000 but the actual amount will be 11,100.

As a result net cash provided by financing activities will be $363,400 ( 374,500 - 11,100)

Which will give the right result as Net increase in cash will be $92,580

You have also written the wrong amount for cash paid for interest as 256,180 which will be 3,120

Then under the heading Noncash investing and financing activities you have chosen the wrong option of Loss from sale of Investment, where as right answer will be Purchase of truck by issuance of note of amount 31,200

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