Answer and Explanation:
The Preparation of the statement of cash flows is shown below:-
<u>Ernst Consulting</u>
<u>Statement of cash flows</u>
<u>For the year ended Oct 31</u>
<u>Particulars Amount</u>
Cash flow from operating activities
Cash paid for salaries -$2,160
($7,350 - $5,190)
Cash paid for rent -$3,910
Paid cash for telephone
expense -$790
Paid cash for miscellaneous
expense -$610
Net cash flow from operating activities -$7,470
Cash flow from investing activities
Purchase of equipment -$18,310
Net cash flow from investing activities -$18,310
Cash flow from financing activities
dividend paid -$2340
Initial investment in Cash $38,320
Net cash flow from financing activities $35,980
Net cash increase/decrease $10,200
Beginning Cash 0
Ending Cash $10,200
Therefore we indicate the minus sign for cash outflow while the positive amount shows cash inflow.
