Question

Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations

(a) Lita Lopez invests $61,000 cash and office equipment valued at $32,000 in the company.
(b) The company purchased an office suite for $45, 000 cash.
(c) The company purchased office equipment for $5,000 cash.
(d) The company purchased $3,300 of office supplies and $1,800 of office equipment on credit.
(e) The company paid a local newspaper $910 cash for printing an announcement of the office’s opening.
(f) The company completed a financial plan for a client and billed that client $4,900 for the service.
(g) The company designed a financial plan for another client and immediately collected a $8,500 cash fee.
(h) Lita Lopez withdrew $1,400 cash from the company for personal use.
(i) The company received $3,900 cash as partial payment from the client described in transaction f.
(j) The company made a partial payment of $900 cash on the equipment purchased in transaction d.
(k) The company paid $2,500 cash for the office secretary’s wages for this period.

Create a table of cash flow.

Answer 1

operating activities

services collected 8,500

account collected 3,900

wages for the perid (2.500)

purchase in cash

supplies (3,300)

advertisement (910)

payment to suppliers (900)

Cash generated from operating activites: 4,790‬

investing activities

purchase of suite (45,000)

office equiment purchase (5,000)

cash used for investing activites 50,000

financing activities

Lopez cash contributiion 61,000

Lopez withdrawals (1,400)

cash generated from financing activites 59,600

cash generated for the period 14,390

beginning of the period 0

Ending Cash 14,390

Step-by-step explanation:

We have to associate each transaction with a cash flow activity.

The first step is checkthe cash involve, we will ignore anythign that is not cash.

then

(A) the contribution finance the business so financing

(B) this suite will be used for several period. It will be the base of operation from the business, is an investment

(c) the equipment will be used for several periods, it is an investment like the suite

(d) we record only for the cash used

(e) paid for an operational cost

(f) no cahs involve

(g) collected from business activities

(h) withdraw from the owner, a (des)financing

(i) receive cash from their activities, operating

(j) payment for equipment, this cash is invest in the equipment

(K) paid for wages, that is an operational cost, without secreaty the firm won't operate