Question

Seth Feye established Reliance Financial Services on July 1, 20Y2. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for July follow:

 

Assets	=Liabilities	+ Stockholders’ Equity
		Accounts		Accounts	Common		Fees	Salaries	Rent	Auto	Supplies	Misc.
	Cash	+Receivable	+ Supplies	= Payable	+ Stock	- Dividends	+ Earned	- Expense	- Expense	- Expense	- Expense	- Expense
a.	+52,000				+52,000
b.			+6,200	+6,200
Bal.	52,000		6,200	6,200	52,000
c.	-3,400			-3,400
Bal.	48,600		6,200	2,800	52,000
d.	+106,000						+106,000
Bal.	154,600		6,200	2,800	52,000		106,000
e.	-33,600								-33,600
Bal.	121,000		6,200	2,800	52,000		106,000		-33,600
f.	-21,300									-14,400		-6,900
Bal.	99,700		6,200	2,800	52,000		106,000		-33,600	-14,400		-6,900
g.	-60,000							-60,000
Bal.	39,700		6,200	2,800	52,000		106,000	-60,000	-33,600	-14,400		-6,900
h.			-3,800								-3,800
Bal.	39,700		2,400	2,800	52,000		106,000	-60,000	-33,600	-14,400	-3,800	-6,900
i.		+50,600					+50,600
Bal.	39,700	50,600	2,400	2,800	52,000		156,600	-60,000	-33,600	-14,400	-3,800	-6,900
j.	-10,000					-10,000
Bal.	29,700	50,600	2,400	2,800	52,000	-10,000	156,600	-60,000	-33,600	-14,400	-3,800	-6,900

Prepare a statement of cash flows for the month ending July 31, 20Y2. Refer to the lists of Accounts, Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Use the minus sign to indicate cash outflows, cash payments and decreases in cash. You will not need to enter colons (:) on the financial statements. If an amount is zero, enter "0".

Answer 1

Reliance Financial services

Cashflow statement for the month Ended July 31, 2019

Cashflow from operating activities:
Cash received from customers	$106,000
Less: cash payment for expenses and payments to creditors*	($118,300)
Net cashflow used for operating activities		$(12,300)
Cashflow from investing activities		0
Cashflow from financing activities:
Cash received as from issue of common stock	$52,000
Deduct cash cash dividends paid	(10,000)
Net cashflows from financing activities		42,000
Net increase in cash at July 31, 20Y2		$29,700

*$3,400+$33,600+$21,300+$60,000 these amounts are taken from cash columns shown in the problem.

CASH FLOW STATEMENT: It is a financial statement which shows cash flow activities periodically.

cash flow statement can be prepared by using two methods

1. Direct method,

2. Indirect method