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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Preparing a Prospective Statement of Cash Flows

Jane and Harvey Wentland have decided to open a retail athletic supply store, Fitness Outfitters Inc. They will stock clothing, shoes, and supplies used in running, swimming, bicycling, weight lifting, and other exercise and athletic activities. During their first year of operations, 2019, expect the following results. (Subsequent years are expected to be more successful.)

Chapter 11, Problem 62.1C, Preparing a Prospective Statement of Cash Flows Jane and Harvey Wentland have decided to open a , example  1

By the end of 2019, Fitness Outfitters needs to have a cash balance of $5,000 and is expected to have the following partial balance sheet:

Chapter 11, Problem 62.1C, Preparing a Prospective Statement of Cash Flows Jane and Harvey Wentland have decided to open a , example  2

Required:

Prepare as much of the statement of cash flows for 2019 as you can. Use the direct method to determine cash flows from operations.

To determine

Concept introduction:

Cash flow statement also known as statement of cash flows shows inflow and outflow of cash and it is divided into three categories- operating, investing and financing activities.

To prepare:

Cash Flow Statement for 2019 using direct method.

Explanation

CASH FLOW STATEMENT FOR FITNESS OUTFITTERS INC.

Cash Flow from operating activities Amount ($)
Cash Collection from the Sales (629,000)
Cash payments for cost of goods sold (307,000)
Cash payments for operating expenses (340,000)
Net Cash Provided from Operating Activities (18,000)
Cash Flow From Investing Activities
Purchases of Fixed Assets (97,000)
Net cash Used in Investing Activities (97,000

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