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Prepare the Statement of Cash Flows for Smart Touch Learning for the month ended December 31, 2016 from the provided information. Within each section of the statement, use the drop-down menus to enter the accounts. Then enter the account balances and calculate ending balances. Enter decreases in cash with a minus sign or parentheses.

Cash balance, December 1, 2016 is $18,100
Transactions
Dec. 1 Common stock was issued to stockholders for $8,100 cash.
7 Purchased equipment for $1,800 on account.
14 Paid $20,100 cash for land.
17 Paid cash expenses: office rent, $1,400; employees' salaries, $1,200; utilities, $400.
23 Paid cash dividends of $2,400.
26 Earned service revenue for the month, $4,900, receiving cash.

1 answer

To prepare the Statement of Cash Flows for Smart Touch Learning for the month ended December 31, 2016, we will organize the cash flows into three sections: Operating Activities, Investing Activities, and Financing Activities.

Here's how the cash flows will be reported based on the provided transactions:

Smart Touch Learning

Statement of Cash Flows

For the Month Ended December 31, 2016

Cash Flows from Operating Activities:

  • Cash received from customers (Service Revenue): $4,900
  • Cash paid for office rent: ($1,400)
  • Cash paid for employees' salaries: ($1,200)
  • Cash paid for utilities: ($400)
  • Cash paid for dividends: ($2,400)

Net Cash Provided by Operating Activities: \[ 4,900 - 1,400 - 1,200 - 400 - 2,400 = -500 \]

Cash Flows from Investing Activities:

  • Purchased equipment: ($1,800)
  • Cash paid for land: ($20,100)

Net Cash Used in Investing Activities: \[ -1,800 - 20,100 = -21,900 \]

Cash Flows from Financing Activities:

  • Issuance of common stock: $8,100

Net Cash Provided by Financing Activities: \[ 8,100 \]

Net Increase (Decrease) in Cash:

\[ Net Cash from Operating Activities + Net Cash from Investing Activities + Net Cash from Financing Activities \] \[ -500 - 21,900 + 8,100 = -14,300 \]

Cash Balance:

  • Cash balance at beginning (December 1, 2016): $18,100
  • Net decrease in cash: ($14,300)

Ending Cash Balance (December 31, 2016): \[ 18,100 - 14,300 = 3,800 \]

Summary of Cash Flows:

  • Net Cash Provided by Operating Activities: ($500)
  • Net Cash Used in Investing Activities: ($21,900)
  • Net Cash Provided by Financing Activities: $8,100
  • Net Decrease in Cash: ($14,300)
  • Ending Cash Balance: $3,800

Final Statement:

Smart Touch Learning
Statement of Cash Flows
For the Month Ended December 31, 2016

Cash Flows from Operating Activities:
  Cash received from customers                  $4,900
  Cash paid for office rent                     ($1,400)
  Cash paid for employees' salaries             ($1,200)
  Cash paid for utilities                        ($400)
  Cash paid for dividends                        ($2,400)
-------------------------------------------------------
Net Cash Provided by Operating Activities       ($500)

Cash Flows from Investing Activities:
  Purchase of equipment                         ($1,800)
  Cash paid for land                            ($20,100)
-------------------------------------------------------
Net Cash Used in Investing Activities          ($21,900)

Cash Flows from Financing Activities:
  Issuance of common stock                      $8,100
-------------------------------------------------------
Net Cash Provided by Financing Activities       $8,100

Net Increase (Decrease) in Cash                ($14,300)

Cash Balance, December 1, 2016                 $18,100
-------------------------------------------------------
Ending Cash Balance, December 31, 2016       $3,800

This is the completed Statement of Cash Flows for Smart Touch Learning for the month ended December 31, 2016.