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