Question

Preparing the direct method statement of cash flows Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities

Short answer

Net increase in cash is $6,500 and cash balance as on 30 June, 2018 is $47,500.

Step-by-step solution

Cash flow from operating activities

Cash flows from operating activities
Receipts:
Collection from customers	$188,000
Payments:
To suppliers	($115,000)
To employees	($66,000)
Net cash provided by operating activities		$7,000

Statement of cash flows- direct method

Amy’s Learning Centre Statement of cash flows Year ended 30 June, 2018
Cash flows from operating activities		$7,000
Cash flows from investing activities
Cash purchase of equipment	($39,000)
Cash receipt from sale of land	$58,000
Net cash used for investing activities		$19,000
Cash flows from financing activities
Cash payment of dividends	($7,500)
Cash payment of notes payable	($34,000)
Cash receipt from issuance of stock	$22,000
Net cash provided by financing activities		($19,500)
Net Increase/(Decrease) in cash		$6,500
Cash balance, 30 June, 2017		$41,000
Cash balance, 30 June, 2018		$47,500