PROJECT transaction 3

Transactions

· This must be handwritten

· This should be two separate pages

all uploaded within one PDF document.

you will need to produce a Statement of Cash Flows statement for the firm below. When completing the transaction ledger for the statement, make sure to write the amount for the transaction under the appropriate account column and if it is a positive or negative. Each transaction is worth 1 point (10 points total). Also, make sure to also indicate which section (operating, investing, financing, or N/A) of the cash flow statement this transaction should appear on (5 points total). After recording your transactions, you will need to construct a statement of cash flows (10 points total) based on those transactions

1. Your initial start-up funds were raised by selling stock to your friends and obtaining a loan from

2. To start making and selling bubble tea, you purchased equipment totaling $150,000. The IRS allows this asset to be depreciated over a 5-year period. You expect these machines to not have a salvage value at the end of this 5-year period.

3. You also purchased other supplies like tea, sugar, flavoring, etc to be ready for opening day. These purchases were made on credit and total $30,000.

You have now been in business for the entire month.

4. During this month, you recorded cash sales of $80,000.

5. Due to the amazing amount of sales this month, you now only have $5,000 in inventory

remaining and have not purchased any additional inventory during the month.

6. You hired 2 part time workers to help out on weekends when the store sees higher traffic. Your

total payroll cost for the month was $4,000. Payroll is deposited electronically on payday.

7. Since it is now the end of the month, you also need to make an interest payment on the loan from

your parents. They don’t like you very much so are charging you an interest rate of 24%.

8. Your suppliers extended you trade credit of 2/10, net 30 which means payment is now due. You

pay off the entire balance for the inventory that was purchased earlier this month.

9. You also need to make a payment for rent (utilities included in rent) for the month which totals

$3,000.

10. Finally, before you can go home for the day, in order to keep in accordance with GAAP, you

need to record depreciation for the month.