Question 5: The following summary transactions occurred during year 1 for Peach

Question

Question 5: The following summary transactions occurred during year 1 for Peach Pink Bakers: Cash Received from: $375,000 7,000 51,765 31,059 100,000 Customers Intereston note receivable Principal on note receivable Sale of investments Proceeds from note payable Cash Paid for: Purchase of inventory Interest on note payable Purchase of equipment Salaries to employees Principal on note payable Payment of dividends to shareholders 157,895 4,500 88,000 88,816 25,000 20,000 The balance of cash and cash equivalents at the beginning of year 1 was $25,000. Required: Prepare a statement of cash flows for year 1 for Peach Pink Bakers. Use the direct method for reporting operating activities.

Explanation / Answer

Statement of cash flows Cash Flow from Operating Activities Cash Received from customers 375000 Interest on Note Receivale 7000 Purchase of Inventory -157895 Interest on Note payable -4500 Salaries to Employees -88816 Net Cashflow from Operating activities 130789 Cashflow from Investing activities Principal on Note Receivable 51765 Sale of Investments 31059 Purchase of Equipment -88000 Net Cashflow from Investing activities -5176 Cashflow from financing activity Proceeds from Note Payable 100000 Pricipal on Note Payable -25000 Payment of dividends -22000 Net Cashflow from financing activity 53000 Net Increase(decrease) in Cash 178613 Beginning cash balance 25000 Ending Cash Balance 203613

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