Question
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
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/Spending Amount $ Salary received over the last year, net of income tax 45,000 Rent and utilities paid 16,600 Car expenses paid 4,800 Credit card debt at the start of the year 1,000 Food, entertaining, recreation paid 6,000 Credit card debt at the end of the year 2,500 Line of credit at the start of the year 2,500 Line of credit at the end of the year 1,200 Purchase of car 20,000 Car loan at the end of the year 15,000 Cash account balance at the beginning of the year 500 Cash received from disposal of motorcycle 1,000 Cash received from disposal of computer 100 Cash account balance at the end of the year 1,000 Purchase of Investments 5,500 Student loan at the beginning of the year 15,000 Student loan at the end of the year 10,000 Purchase of new computer. 1,500 Interest expense paid 1,400 Instructions Prepare a statement of cash flow for your friend from information provided above using the direct method. (21 marks) 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)
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