Question

Preparing the statement of cash flows Polk Street Homes had the following cash transactions for the month ended July 31, 2018.Cash receipts: Collections from customers $25,000Issued common stock 13,000Cash payments: Rent 500Utilities 2,000Salaries 1500Purchase of equipment 25,000Payment of cash dividends 4,000Cash balance, July 1, 2018 14,000Cash balance, July 31, 2018 19,000Prepare the statement of cash flows for Polk Street Homes for the month ended July 31, 2018.

Answer 1

Answer:

Explanation:

The preparation of the Cash Flows from three Activities - Direct Method is shown below:  

Cash flow from Operating activities  

Cash receipts:

Collections from customers $25,000

Less: Cash payments:

Rent -$500

Utilities -$2,000

Salaries -$1,500

Net Cash flow from Operating activities $21,000

Cash flow from Investing activities  

Purchase of equipment -$25,000

Net Cash flow from Investing activities -$25,000

Cash flow from Financing activities  

Issued common stock $13,000

Less: Payment of cash dividends -$4,000

Net Cash flow from Financing activities $9,000

Net Cash flow from Operating activities $21,000

Net Cash flow from Investing activities -$25,000

Net Cash flow from Financing activities $9,000

Net increase (decrease) in cash for the year is $5,000

Add: Cash balance, July 1, 2018 $14,000

Cash balance, July 31, 2018 $19,000