Question

prepare a classified balance sheet and a statement of cash flows for the month ending August

On the 1^st of August, “Brothers haircut” had these transactions during this month.

1. On August 2, Paid $2200 cash for August salon rent.
2. On August 4, Incurred $380 of advertising costs due in 20 days
3. On August 5, Purchased salon equipment for $120
4. On August 7, Paid for supplies (shampoos, creams, and gels) $350
5. On August 8, received $280 for selling gels
6. On August 12, paid $180 water bill
7. On August 12, paid $160 for electricity bill
8. On August 14, incurred $1050 for the business’s bank loan due in 14 days
9. On August 16, purchased a new chair set up for $400
10. On August 17, paid the amount due for the influencer $380 for advertising
11. On August 19, paid $90 for my internet bill
12. On August 21, received for $200 selling of shampoos
13. On August 23, paid $110 for insurance
14. On August 24, cleaner $110
15. On August 27, paid $1050 for the business’s bank loan
16. On August 28, gas bills $35
17. On August 30, extra salary cost to a new trainee $400
18. On August 30, purchased a new tv screen $600
19. On August 30, paid $6000 in salaries for the month of August.
20. On August 30, received $14000 from haircuts services during the month of August. And $500 of selling gels, creams, and shampoos

Answer 1

A. Cash Fow Statement for the period ended 31st August (Using direct method)

PARTICULARS Amount ($) Amount($)

1. Cash flow from Operating activities

(i) Operational Income :-

(a)Revenue from operations (14000+500+280+200) 14980 14980

Less:

(ii) Operational Expenditure:-

(a)Cash paid to Salon as rent (2200)

(b)Advertisement costs (380)

(c) Cash paid for supplies (350)

(d)Cash paid against water bill (180)

(e)Cash paid against electricity bill (160)

(f)Salaries paid (6000+400) (6400)

(g)Cash paid against Gas bill   (35)

(h)Cash paid against internet bill (90)

(i)Payment for insurance (110) (9905)

Net cash flow from operting activities 5075

2. Cash Flow from investing activities

(a)Purchased Salon Equipment (120)

(b)Purchased a new chair setup (400)

(c)Cleaner (110)

(d)Purchased a New TV Screen (600) (1230)

Net cash flow from investing activities (1230)

3. Cash flow from Financing Activities

(a)Bank loan paid (1050) (1050)

Net cash flow from financing activities (1050)

Net Increase/Decrease in cash 2795

Cash at the ebginning of the period Nil

Cash at the end of the period 2795

B. BALANCE SHEET FOR THE PERIOD ENDING 31st AUGUST (Extracted)

PARTICULARS AMOUNT($) AMOUNT($)

1. Fixed Assets

(a)Salon Equipment 120

(b)Chair Set up 400

(c)Cleaner 110

(d)TV Screen 600 1230

2. Current Assets

(a) Cash in hand 2795

Total Assets 4025