Question

Sanyu Sony started a new business and completed these transactions during December.

Dec. 1 Sanyu Sony transferred \(65000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.

2 The company rented office space and paid \)1000 cash for the December rent.

3 The company purchased \(13000 of electrical equipment by paying \)4800 cash and agreeing to pay the \(8200 balance in 30 days.

5 The company purchased office supplies by paying \)800 cash.

6 The company completed electrical work and immediately collected \(1200 cash for these services.

8 The company purchased \)2530 of office equipment on credit.

15 The company completed electrical work on credit in the amount of \(5000.

18 The company purchased \)350 of office supplies on credit.

20 The company paid \(2530 cash for the office equipment purchased on December 8.

24 The company billed a client \)900 for electrical work completed; the balance is due in 30 days.

28 The company received \(5000 cash for the work completed on December 15.

29 The company paid the assistant’s salary of \)1400 cash for this month.

30 The company paid \(540 cash for this month’s utility bill.

31 The company paid \)950 cash in dividends to the owner (sole shareholder).

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

Short answer

The cash flow statement is prepared. The cash flow from operating activities is $3,260, net cash used in investing activities is $8,130 and cash flow from financing activities is $64,050.

Step-by-step solution

Computation of cash expense

$\begin{array}{rcl}\mathrm{Cash}\mathrm{expenses}& =& \mathrm{Rent}\mathrm{expense}+\mathrm{Salary}\mathrm{expense}+\mathrm{Utility}\mathrm{expense}\\ & =& \$1,000+\$1,400+\$540\\ & =& \$2,940\end{array}$

Preparation of statement of retained earnings

Gram CO.
Statement of cash flow
As of May 31
Particulars	Amount ($)	Amount ($)
Cash flows from operating activities
Cash received from clients	6,200
Cash paid for expenditures	-2,940
Net cash flow from operating activities		3,260
Cash flows from investing activities
Office Supplies purchased	-800
Office equipment purchased	-2,530
Electrical Equipment	-4,800
Net cash used in investing activities		-8,130
Cash flows from financing activities
Common stock issued	65,000
Dividend paid	-950
Net Cash flows from financing activities		64,050
Net increase in cash		59,180
Cash balance, May 1		0
Cash balance, May 31		59,180