The following transactions pertain to the operations of Ewing company for year 2

Question

The following transactions pertain to the operations of Ewing company for year 2.
1.Acquired $30,000 cash from the issue of common stock 2.Provided $65,000 of services on account 3.Paid $22,000 cash on accounts payable 4.Performed services for $8000 cash 5.Collected $51,000 cash from accounts receivable 6.Incurred $37,000 of operating expenses on account 7.Paid $6500 cash for one years rent in advance 8.Paid a $4000 cash dividend to the stockholders 9.Paid $1200 cash for supplies to be used in the future 10.Recognize $3100 of accrued salary expense

the Year Ended IL Year 2 Net cash flow from operating activities Cash flows from investing acivities Cash flows from financing activities Net cash flow from financing activities Net change in cash Ending cash b

Explanation / Answer

Statement of cash flows under direct method

Cash flow from investing activities

Cash paid on supplies uesd for furniture

Note: Assumption

Opareting expenses paid in cash except salary 3,100$ which is out standing and to be payable in next year

Cash flow from opareting activities Amount$ Collections from accounts receivable 51,000 Accounts payable (22,000) Services provided on cash 8,000 Prepaid Rent (6,500) Opareting expenses (37,000-3,100) (33,900) Net cash flow from opareting activities (3,400)

Cash flow from investing activities

Cash paid on supplies uesd for furniture

(1,200) Cash flow from Financeing activities Issue of common stock 30,000 Dividend paid (4,000) Net cash flow from Financeing activities 26,000 Net change in cash flow 21,400 Begening cash balance 6,700 Ending cash balance 28,100

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