Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following transactions occurred during March 2024 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 40,000 shares of common stock

The following transactions occurred during March 2024 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

  1. Issued 40,000 shares of common stock in exchange for $400,000 in cash.
  2. Purchased equipment at a cost of $60,000. $20,000 cash was paid and a note payable to the seller was signed for the balance owed.
  3. Purchased inventory on account at a cost of $110,000. The company uses the perpetual inventory system.
  4. Credit sales for the month totaled $130,000. The cost of the goods sold was $80,000.
  5. Paid $6,000 in rent on the warehouse building for the month of March.
  6. Paid $7,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2024.
  7. Paid $80,000 on account for the merchandise purchased in 3.
  8. Collected $65,000 from customers on account.
  9. Recorded depreciation expense of $2,000 for the month on the equipment.

Required:

  1. Analyze each transaction by indicating the cash effect and classify each as a financing, investing, and/or operating activity (a transaction can represent more than one type of activity).
  2. Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was $50,000.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Beyond Audit Auditing Remotely And Delivering Value

Authors: Robert L. Mainardi

1st Edition

1119789605, 978-1119789604

More Books

Students also viewed these Accounting questions

Question

b. Where did they come from?

Answered: 1 week ago