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Problem 4-5B Record transactions, post to the Cash T-account, and prepare the statement of cash flows...

Problem 4-5B Record transactions, post to the Cash T-account, and prepare the statement of cash flows (LO4-7)

[The following information applies to the questions displayed below.]

Peter loves dogs and cats. For the past several years, he has owned and operated Homeward Bound, which temporarily houses pets while their owners go on vacation. For the month of June, the company has the following transactions:

1. June 2 Obtain cash by borrowing $21,000 from the bank by signing a note.
2. June 3 Pay rent for the current month, $1,500.
3. June 7 Provide services to customers, $4,100 for cash and $2,400 on account.
4. June 11 Purchase cages and equipment necessary to maintain the animals, $7,300 cash.
5. June 17 Pay employees’ salaries for the first half of the month, $5,400.
6. June 22 Pay dividends to stockholders, $1,275.
7. June 25 Receive cash in advance from a customer who wants to house his two dogs (Chance and Shadow) and cat (Sassy) while he goes on vacation the month of July, $1,550.
8. June 28 Pay utilities for the month, $2,200.
9. June 30

Record salaries earned by employees for the second half of the month, $5,400. Payment will be made on July 2.

Solutions

Expert Solution

Cash Account
Description Debit Credit Date
Beginning Balance
Note Payable $    21,000.00 Jun-02
Rent Expense $      1,500.00 Jun-03
Service Revenue $      4,100.00 Jun-07
Equipment $      7,300.00 Jun-11
Salaries Expense $      5,400.00 Jun-17
Dividend $      1,275.00 Jun-22
Unearned Service Revenue $      1,550.00 Jun-25
Utilities Expense $      2,200.00 Jun-28
Ending Balance $      8,975.00

Beginning Balance taken as $0,
Only transaction involving cash are recorded in cash book, other transactions like Sales on account and payable not entered.

Cash Flow Statement
Direct Method
Cash Flow from Operating Activities
Cash paid for rent $          (1,500)
Cash collected for performance of service $      4,100.00
Cash paid for Salaries $    (5,400.00)
Cash collected for service to be performed $      1,550.00
Cash paid for Utilities $    (2,200.00)
Cash used in Operating Activities $ (3,450.00)
Cash flow from Investing Activities
Purchase of Equipment $    (7,300.00)
Net cash used In investing activities $ (7,300.00)
Cash flow from Financing Activities
Issue of Notes Payable $    21,000.00
Dividend Paid $    (1,275.00)
Net cash used in financing activities $ 19,725.00
Increase in Cash $    8,975.00
Opening Balance of Cash $                 -  
Closing Balance of Cash $    8,975.00

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