Your friend and colleague has been working for about a year since graduating from university. He has come to you for advice on his saving and spending habits. You have accumulated the following information on his savings and spending that has occurred over the past year:

Saving/SpendingAmount $Salary received over the last year, net of income tax45,000Rent and utilities paid16,600Car expenses paid4,800Credit card debt at the start of the year1,000Food, entertaining, recreation paid6,000Credit card debt at the end of the year2,500Line of credit at the start of the year2,500Line of credit at the end of the year1,200Purchase of car20,000Car loan at the end of the year15,000Cash account balance at the beginning of the year500Cash received from disposal of motorcycle1,000Cash received from disposal of computer100Cash account balance at the end of the year1,000Purchase of Investments5,500Student loan at the beginning of the year15,000Student loan at the end of the year10,000Purchase of new computer1,500Interest expense paid1,400

Instructions

1. Prepare a statement of cash flow for your friend from information provided above using the direct method. (21 marks)
2. Can you provide some advice to your friend on how he could improve his cash flow strategies, such as managing debt levels and terms of payment? (4 marks)