Below are several transactions for Meyers Corporation for 2021. Issue common stock for cash, $49,000. Purchase...

Below are several transactions for Meyers Corporation for 2021.

Issue common stock for cash, $49,000.
Purchase building and land with cash, $34,000.
Provide services to customers on account, $6,900.
Pay utilities on building, $950.
Collect $4,900 on account from customers.
Pay employee salaries, $8,900.
Pay dividends to stockholders, $3,900.

Required:

For each transaction, determine the amount of cash flows. If cash is involved in the transaction, indicate whether Meyers should classify it as operating, investing, or financing in a statement of cash flows. (Enter N/A if the question is not applicable to the statement. List cash outflows as negative amounts.)

Calculate net cash flows for the year. (List cash outflows as negative amounts.)

Assuming the balance of cash on January 1, 2021, equals $4,300, calculate the balance of cash on December 31, 2021.

Expert Solution

1. Amount of cash flow and cash flow classification is as shown below:

	Cash	Amount of cash flow	Statement of cash Flow
a. Issue common stock for cash, $49,000.	49,000	Cash increase by 49,000	Financing activity
b. Purchase building and land with cash, $34,000.	-34,000	Cash decrease by 34,000	Investing activity
c. Provide services to customers on account, $6,900.		No effect	N/A
d. Pay utilities on building, $950.	-950	Cash decrease by 950	Operating activity
e. Collect $4,900 on account from customers.	4,900	Cash increase by 4,900	Operating activity
f. Pay employee salaries, $8,900.	-8,900	Cash decrease by 8,900	Operating activity
g. Pay dividends to stockholders, $3,900.	-3,900	Cash decrease by 3,900	Financing activity

2. Net cash flows for the year is:

	Cash
a. Issue common stock for cash, $49,000.	49,000
b. Purchase building and land with cash, $34,000.	-34,000
c. Provide services to customers on account, $6,900.
d. Pay utilities on building, $950.	-950
e. Collect $4,900 on account from customers.	4,900
f. Pay employee salaries, $8,900.	-8,900
g. Pay dividends to stockholders, $3,900.	-3,900
Net Cash Flow	6,150

3. Balance of cash on December 31, 2021, is:

Opening Cash balance 4,300

Add: Cash Increased 6,150

Closing cash balance = $10,450

ekkarill92 answered 5 months ago

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