Use the following information and identity an Income Statement to calculate the net profit and a Statement of Cash Flows (identify each payment separately) for the month. Identify 2 causes for the difference between net profit and cash flow from operating activities. Describe what the Cash Flow Statement reveals.

Bank balance beginning of month

5,600

Inventory purchased for cash

28,000

Bank balance, end of month

9,800

Miscellaneous expenses paid

8,000

Cash drawings

20,000

Payment on accounts payable

44,000

Cash sales

72,000

Proceeds from bank loan

83,000

Collections from accounts receivable

32,000

Proceeds from sale of equipment

12,000

Cost of sales

64,000

Rent expense

800

Credit sales

46,000

Rent paid in advance for the next 6 months

4,800

Depreciation expense

3,500

Wages paid

22,000

Equipment purchased for cash

68,000

identity an Income Statement to calculate the net profit for the month.

Income Statement

identity a Statement of Cash Flows for the month--identify each payment separately.

Statement of Cash Flows

Cash Flows from operating activities

Net cash used in operating activities

Cash from Investing Activities

Identify 2 causes for the difference between net profit and cash flow from operating activities

(d)What do the 3 sections of the Cash Flow Statement reveal about the firm?

For each of the 3 activities:

state whether the flow is positive or negative;

describe in words what the net cash flow for each of the 3 activities indicate and

state whether that is a "good" sign or a "not good" sign for the business.

Operating activities:

Investing activities:

Financing activities:

Net used in investing activities

Cash from financing activities

Net cash provided from financing activities

Net increase/(decrease) in cash for the month

Cash at beginning of the month

Cash at the end of the month