Question

Transaction Analysis And Cash Flow Statement Starting a Company (1) Issues 50,000 shares of $10 par value common stock at par value for cash. (2) Acquires land and building costing $225,000 with the payment of $50,000 cash and the assumption of a 20-year, 8-percent mortgage for the balance. (3) Purchases a used crane for $13,200 cash (4) Acquires raw materials costing $8,600 on account. (5) Returns defective raw materials purchased in (4) and costing $900 to the supplier. The account has not yet been paid. (6) Pays the supplier in (4) and (5) the amount due, less a 2-percent discount for prompt payment. The firm treats cash discount as a reduction in the acquisition cost of raw materials. (7) Obtains a fire insurance policy providing $500,000 coverage beginning next month. It pays the 1-year premium of $4,950. (8) Issues a check for $1,800 for 3 months rent in advance for office space. (9) Purchases a patent on a machine process for $90,000 cash. (10) Purchases office equipment for $2,700, making a down payment of $250 and agreeing to pay the balance in 30 days. (11) Pays $825 to Express Trucking Company for delivering the equipment purchased in (3). Directions: a) Prepare the following analysis table. Cash + Other CA + PP&E + Other NCA = CL + NCA + CC + RE (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) FYE b) Prepare the following cash flow statement (a direct form). Cash Flow Statement ​Operating Cash Flows: ______________ ​Investing Cash Flows: _______________ ​Financing Cash Flows: ________________

Answer 1

Req A: Table
S.No.	Cash    +	Other CA +	PP & E +	Other NCA           =		CL   +	NCL +	CC +	RE
1	50000							50000
2	-50000		225000				175000
3	-13200		13200
4		8600				8600
5		-900				-900
6	-7546	-154				-7700
7	-4950	4950
8	-1800	1800
9	-90000			90000
10	-250		2700			2450
11	-825		825
Net Effect	-118571	14296	241725	90000		2450	175000	50000
Req b:
CASH FLOW STATEMENT
Cash flows from Operating Activities:
Payment to Suppliers of Inventory					-7546
payment of Prepaid insurance					-4950
payment of rent prepaid					-1800
Net caash used in Operating Activities						-14296
Cash Flows from Investing Activities:
Purchase of Land and building					-50000
Purchase of Equipment					-13200
Purchase of Patents					-90000
Down payment of Equipment purchased					-250
Expense paid on carriage of Equipment purchased					-825
Net cash used in investing activities						-154275
Cashflows from Financing Activities:
Common Stock issued fro cash					50,000
Net cash provided from financing activities						50000
		Net cash outflow from All activities				-118571