Question

Nina Niko launched a new business Niko’s Maintenance Co. that began operations on June 1. The following transactions were completed by the company during that first month.

June

1 Nina Niko invested \(130000 cash in the company in exchange for its common stock.

2 The company rented a furnished office and paid \)6000 cash for June’s rent.

4 The company purchased \(2400 of equipment on credit.

6 The company paid \)1150 cash for this month’s advertising of the opening of the business.

8 The company completed maintenance services for a customer and immediately collected \(850 cash.

14 The company completed \)7500 of maintenance services for City Center on credit.

16 The company paid \(800 cash for an assistant’s salary for the first half of the month.

20 The company received \)7500 cash payment for services completed for City Center on June 14.

21 The company completed \(7900 of maintenance services for Paula’s Beauty Shop on credit.

24 The company completed \)675 of maintenance services for Build-It Coop on credit.

25 The company received \(7900 cash payment from Paula’s Beauty Shop for the work completed on June 21.

26 The company made payment of \)2400 cash for equipment purchased on June 4.

28 The company paid \(800 cash for an assistant’s salary for the second half of this month.

29 The company paid \)4000 cash in dividends to the owner (sole shareholder).

30 The company paid \(150 cash for this month’s telephone bill.

30 The company paid \)890 cash for this month’s utilities.

Required 3. Prepare the statement of cash flows for the month of June

Short answer

The statement of cash flow is prepared and the closing cash balance is $130,060.

Step-by-step solution

Computation expenses paid in cash

$\begin{array}{rcl}\mathrm{Expenses}\mathrm{paid}\mathrm{in}\mathrm{cash}& =& \mathrm{Rent}\mathrm{expense}+\mathrm{Salary}\mathrm{expense}+\mathrm{Telephone}\mathrm{bill}+\mathrm{Utility}\mathrm{expense}\\ & =& \$6,000+\$1,600+\$150+\$890+\$1,150\\ & =& \$9,790\end{array}$

Preparation of statement of cash flow

Niko’s Maintenance Co
Statement of cash flow
For the month ending June 31
Cash flow from operating activities	Amount ($)	Amount ($)
Cash received from clients	16,250
Cash paid for expenses	-9,790
Net cash flow from operating activities		6,460
Cash flow from investing activities
Purchase of equipment	-2,400
Net cash used in investing activities		-2,400
Cash flow from financing activities
Common stock issued	130,000
Dividends paid	-4,000
Net cash used in financing activities		126,000
Net Increase in cash		130,060
Opening Cash balance		0
Closing cash balance		130,060