Question

The following summary transactions occurred during 2021 for Bluebonnet Bakers:

The balance of cash and cash equivalents at the beginning of 2021 was $17,000.

 

Required:
Prepare a statement of cash flows for 2021 for Bluebonnet Bakers. Use the direct method for reporting operating activities.

Answer 1

 Bluebonnet Bakers

           Statement of Cash Flows

For the Year Ended December 31, 2021

 

Cash flows from operating activities:

          Cash received from customers              $ 380,000

          Cash received for interest                              6,000

          Cash paid for merchandise                      (160,000)

          Cash paid for interest                                   (5,000)

          Cash paid for salaries                                  (90,000)

           Net cash flows from operating activities                $131,000

 

Cash flows from investing activities:

          Collection of notes receivable                   50,000

          Sale of investments                                     30,000

          Purchase of equipment                             (85,000)

           Net cash flows from investing activities                      (5,000)

 

Cash flows from financing activities:

          Issuance of notes payable                       100,000

          Payment of notes payable                        (25,000)

          Dividends paid to shareholders               (20,000)

           Net cash flows from financing activities                      55,000

 

Net increase in cash                                                                 181,000

 

Cash and cash equivalents, January 1                                     17,000

 

Cash and cash equivalents, December 31                         $ 198,000

Cash and cash equivalents, December 31                         $ 198,000