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Cornerstones of Financial Accounti...

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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, they expect the following results. (Subsequent years are expected to be more successful.)

Chapter 11, Problem 62.2C, 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 62.2C, Preparing a Prospective Statement of Cash Flows Jane and Harvey Wentland have decided to open a , example  2

Assume that all sales will be for cash and that equipment will be acquired for cash.

In the statement that you prepared for Requirement 1, by how much does the prospective cash balance exceed or fall short of the desired cash balance? If a shortfall occurs, where would you suggest that Jane and Harvey seek additional cash?

To determine

Concept introduction:

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

Whether the cash required by the company falls short or exceeds and if falls short, then remedies for the same.

Explanation

Cash Flow Statement

Cash Flow from operating activities Amount ($)
Net Cash Provided from Operating Activities (18,000)
Net cash Used in Investing Activities (97,000)
Net cash Used in Financing Activities 100,000
Net Decrease in Cash (

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