Question

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

July 1 Reyna Rivera invested \(80,000 cash in the company in exchange for its common stock.

2 The company rented office space and paid \)700 cash for the July rent.

3 The company purchased roofing equipment for \(5,000 by paying \)1,000 cash and agreeing to pay the \(4,000 balance in 30 days.

6 The company purchased office supplies for \)600 cash.

8 The company completed work for a customer and immediately collected \(7,600 cash for the work.

10 The company purchased \)2,300 of office equipment on credit.

15 The company completed work for a customer on credit in the amount of \(8,200.

17 The company purchased \)3,100 of office supplies on credit.

23 The company paid \(2,300 cash for the office equipment purchased on July 10.

25 The company billed a customer \)5,000 for work completed; the balance is due in 30 days.

28 The company received \(8,200 cash for the work completed on July 15.

30 The company paid an assistant’s salary of \)1,560 cash for this month.

31 The company paid \(295 cash for this month’s utility bill.

31 The company paid \)1,800 cash in dividends to the owner (sole shareholder).

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

Short answer

The closing balance of cash will be $87,545.

Step-by-step solution

Computation of cash revenues

$$\begin{gathered} \mathbf{\text{CashExpenses=RentExpense+SalaryExpenses+Utilitiesexpense}} \\ \mathbf{=}\mathbf{700}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{560}\mathbf{+}\mathbf{295} \\ \mathbf{=}\mathbf{\$}\mathbf{2}\mathbf{,}\mathbf{555} \end{gathered}$$

Preparation of statement of cash flow

Rivera Roofing Company
Statement of Cashflow
For the month ended July 31
	Amount ($)	Amount ($)
Cash flow from operating activities
Cash revenues (7600+8200)	15,800
Cash expenses	-2,555
Net cash flow from operating activities		13,245
Cash flow from investing activities
Purchase of roofing equipment	-1,000
Purchase of office supplies	-600
Purchase of equipment	-2,300
Net cash used in investing activities		-3,900
Cash flow from financing activities
Common stock issued	80,000
Dividends paid	-1,800
Net cash flow from financing activities		78,200
Net Increase in cash		87,545
Opening Cash		0
Closing cash		87,545