Problem 3-7 Transaction Analysis and Financial Statements Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the first month of business: June 2: Received contributions of $10,000 from each of the three owners of the business in exchange for shares of stock. June 5: Purchased a computer system for $12,000. The agreement with the vendor requires a down payment of $2,500 with the balance due in 60 days. June 8: Signed a two-year promissory note at the bank and received cash of $20,000. June 15: Billed $12,350 to clients for the first half of June. Clients are billed twice a month for services performed during the month, and the bills are payable within ten days. June 17: Paid a $900 bill from the local newspaper for advertising for the month of June. June 23: Received the amounts billed to clients for services performed during the first half of the month. June 28: Received and paid gas, electric, and water bills. The total amount is $2,700. June 29: Received the landlords bill for $2,200 for rent on the office space that Neveranerror leases. The bill is payable by the 10th of the following month. June 30: Paid salaries and wages for June. The total amount is $5,670. June 30: Billed $18,400 to clients for the second half of June. June 30: Declared and paid dividends in the amount of $6,000.

Required Prepare a Statement of Cash Flows using the above information.

Hint: Please use these already completed financial statements.

NEVERANERROR INC. TRANSACTIONS FOR THE MONTH OF JUNE Assets Accounts Receivable Liabilities Accounts Payable Rent Payable Computer Notes Payable Owners' Equity Capital Retained Stock Earnings $30,000 Cash $30,000 -2,500 $27,500 20,000 $47,500 $12,000 $12,000 $9,500 $9,500 June 2 June 5 Bal. June 8 Bal. June 15 Bal. June 17 $30,000 $20,000 $20,000 $12,000 $9,500 $12,350 $12,350 $12,000 $9,500 $12,350 $12,350 -900 $11,450 $30,000 $30,000 $30,000 $30,000 Bal. $12,000 $47,500 -900 $46,600 12,350 $58,950 -2,700 $56,250 $9,500 $12,350 -12,350 $12,000 $9,500 $20,000 $20,000 $20,000 $20,000 $20,000 $12,000 $9,500 $30,000 $2,200 $2,200 $12,000 June 23 Bal. June 28 Bal. June 29 Bal. June 30 Bal. June 30 Bal. June 30 Bal. $9,500 $30,000 $56,250 -5,670 $50,580 $11,450 -2,700 $ 8,750 -2,200 $ 6,550 -5,670 $ 880 18,400 $19,280 -6.000 $13,280 $12,000 $2,200 $9,500 $20,000 $30,000 $18,400 $18,400 $12,000 $2,200 $9,500 $20,000 $30,000 $50,580 -6,000 $44.580 $18,400 $12.000 $2.200 $9.500 $20.000 $30,000 TOTAL ASSETS: $74,980 TOTAL LIABILITIES AND OWNERS' EQUITY: $74,980 NEVERANERROR INC. INCOME STATEMENT FOR THE MONTH ENDED JUNE 30 $30,750 Service revenue....... Expenses: Advertising Utilities............. Rent ....................... Salaries and wages Net income... .............................................. $ 900 2,700 2,200 5,670 11.470 $19,280 ... NEVERANERROR INC. STATEMENT OF RETAINED EARNINGS FOR THE MONTH ENDED JUNE 30 Beginning balance, June 1.... Add: Net income Deduct: Dividends ... Ending balance, June 30.. $ 0 19,280 (6.000) $13,280 NEVERANERROR INC. BALANCE SHEET JUNE 30 $44,580 18,400 Assets Current assets: Cash. Accounts receivable.. Total current assets.. Property, plant, and equipment: Computer .. Total assets $62,980 12.000 $74.980 $ 9,500 2,200 $11,700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable.. Rent payable .......... Long-term debt: Notes payable ........ Total liabilities. ........... Capital stock...... Retained earnings Total stockholders' equity.... Total liabilities and stockholders' equity ........... 20,000 $31,700 $30,000 13,280 43,280 $74.980