CASH FLOW

Sarah Shepard owns Sarah's Kennels, a business that manufactures wooden dog kennels on the outskirts of Queenstown. The Cash at Bank account for the month of September 2022 shows the following entries:

1. Cash balance on 1 September 2022, $53,300.
2. Cash sales $30,100.
3. Payment of rent for the business premises, $4,500.
4. Sarah took out a loan from the bank, $10,000.
5. Payment to suppliers, $12,600.
6. Payment of Sarah's income tax of $2,000 to the IRD.
7. Payment for new machinery $7,000.
8. Sarah sold a piece of old machinery for $500 cash.
9. Wages paid to employees, $4,000.
10. Sarah withdrew $3,000 cash for personal use.
11. Interest paid $400.

Required:

1. Using the information provided, prepare a properly Classified Statement of Cash Flowsfor the month of September 2022.
2. Discuss the importance of preparing a Cash Flow Statement and what it shows about a business?

(6 marks)

i.

Cash flows from Operating Activities
Inflows:
Outflows:
Net Cash provided/(used) by Operating Activities
Cash flows from Investing Activities
Net Cash provided/(used) by Investing Activities
Cash flows from Financing Activities
Net Cash provided/(used) by Financing Activities
Net Changes in cash
Beginning Cash Balance, 1 September 2022
Ending Cash Balance, 30 September 2022

ii.