Answer and Explanation:
1. The preparation of the balance sheet is presented below:
<u> Squirrel tree services</u>
<u> Balance sheet</u>
<u> For the year ended December, 31, 2021</u>
<u>Liabilities Amount Assets Amount </u>
<u>and stockholder equity</u>
Liabilities
Account payable $15,100 Cash $9,500
Salaries payable $5,300 Supplies $3,600
Note payable $38,000 Prepaid insurance $5,300
Total liabilities $58,400 Building $90,000
Equity
Common stock $40,000
Retained earnings $10,000
Total equity $50,000
Total liabilities & equity $108,400 Total assets $108,400
2. The preparation of the cash flow statement is presented below:
<u> Squirrel tree services</u>
<u> Cash flow statement</u>
<u> For the year ended December, 31, 2021</u>
Particulars Amount ($) Amount ($)
Cash flow from operating activities-
Cash inflows customers 96,000
Cash outflows salaries (40,000)
Cash outflows supplies (22,000)
Net Cash flow from operating activities (A) 34,000
Cash flow from investing activities-
Sale of investments 35,800
Purchase of building (98,000)
Net Cash flow from investing activities (B) (62,200)
Cash flow from financing activities
Borrowed from bank 38,000
Dividends (15,500)
Net Cash flow from financing activities (C) 22,500
Net increase in cash (A+B+C) (5,700)
Add: Cash at beginning of year 15,200
Cash at end of year 9,500
