Question

Katie’s Beauty shop Inc. had the following transactions in May 2014.

 Depreciation expense was 79,000

 Net income was 155,000

 AR increased by 10,000

 Inventory decreased by 25,000

 Sold a building for 800,000,

 Purchased Land for 320,000

 Prepaid rent increased by 22,500

 Sold common stock for 120,000

 Repaid a note payable for 68,900

 AP increased by 22,000

 Income tax payable decreased by 12,000

 Collected on a note receivable 75,600

 Loss on the sale of equipment was 2,000

Using the information above prepare the operating, investing and financing sections of the statement of cash flows

BONUS 3 points: Using the information above, what was the change in cash.

$798,100

Answer 1

Katie’s Beauty shop Inc.
Cash Flow Statement
For year ended 31 December 2014
Cash flows from operating activities
Net Income		$ 155,000
Adjustment to reconcile net income to:
Depreciation expense	$ 79,000
Loss on sale of furniture	$  2,000
Increase in accounts receivable	$(10,000)
decrease in inventory	$ 25,000
Increase in accounts payable	$ 22,000
Increase in Prepaid rent	$(22,500)
Decrease in Income tax payable	$(12,000)
		$ 83,500
Net cash provided by operating activities		$   238,500
Cash flows from investing activities
Proceeds from sale of building	$     800,000
Purchase of Land	$ (320,000)
Net cash provided by investing activities		$     480,000
Cash flows from financing activities
Sale of common stock	$ 120,000
Net of notes receivable (75,600-68,900)	$     6,700
Net cash provided by financing activities		$ 126,700
Net increase in cash and cash equivalents		$ 845,200