Use the following information and prepare an Income Statement (to calculate the net profit) and a Statement of Cash Flows (identify each payment separately) for the month. Identify 2 causes for the difference between net profit and cash flow from operating activities. Describe what the Cash Flow Statement reveals. Bank balance beginning of month 15,600 Inventory purchased for cash 28,000 Bank balance, end of month 19,800 Miscellaneous expenses paid 8,000 Cash drawings 30,000 Payment on accounts payable 44,000 Cash sales 72,000 Proceeds from bank loan 93,000 Collections from accounts receivable 40,000 Proceeds from sale of motor vehicle 12,000 Cost of sales 69,000 Purchase of motor vehicle for cash 68,000 Credit sales 58,000 Rent expense 800 Depreciation 3,500 Rent paid in advance for the next 6 months 4,800 Wages paid 30,000
Use the following information and prepare an Income Statement (to calculate the net profit) and a Statement of
Bank balance beginning of month |
15,600 |
Inventory purchased for cash |
28,000 |
Bank balance, end of month |
19,800 |
Miscellaneous expenses paid |
8,000 |
Cash drawings |
30,000 |
Payment on accounts payable |
44,000 |
Cash sales |
72,000 |
Proceeds from bank loan |
93,000 |
Collections from |
40,000 |
Proceeds from sale of motor vehicle |
12,000 |
Cost of sales |
69,000 |
Purchase of motor vehicle for cash |
68,000 |
Credit sales |
58,000 |
Rent expense |
800 |
|
3,500 |
Rent paid in advance for the next 6 months |
4,800 |
|
|
Wages paid |
30,000 |
![a) Prepare an Income Statement to calculate the net profit.
Income Statement
Page 1 of 5
1102AFE ACCOUNTING FOR DECISION MAKING
Trimester 3, 2020
b) Prepare a Statement of Cash Flows for the month.
Statement of Cash Flows
Cash Flows from operating activities
Net cash used in operating activities
Cash from Investing Activities
Net cash used in investing activities
Cash from financing activities
Net cash provided from financing activities
Net increase/(decrease) in cash for the month
Cash at beginning of the month
Cash at the end of the month](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7c2c5b7-509b-4b9e-ade5-81e5059484d9%2F1b86689a-aa2b-444c-9cf7-6c5a46beca18%2Fvbptj7_processed.png&w=3840&q=75)
![c) Identify 2 causes for the difference between net profit and cash flow from operating activities.
(d) What do the 3 sections of the Cash Flow Statement reveal about the firm?
For each of the 3 activities:
state whether the flow is positive or negative;
describe in words what the net cash flow for each of the 3 activities indicate and
state whether that is a "good" sign or a "not good" sign for the business.
Operating activities:
Investing activities:
Financing activities:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7c2c5b7-509b-4b9e-ade5-81e5059484d9%2F1b86689a-aa2b-444c-9cf7-6c5a46beca18%2Fzm1quv9_processed.png&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)