Preparing a statement of cash flows from journal entries
Small and Associates, a small manufacturing firm, entered into the following cash transactions during January 2012:
- Issued 600 shares of stock for $25 each.
- Sold services for $4,000.
- Paid wages of $1,600.
- Purchased land as a long-term investment for $9,000 cash.
- Paid a $2,000 dividend.
- Sold land with a book value of $3,000 for $3,500 cash.
- Paid $1,500 to the bank: $900 to reduce the principal on an outstanding loan and $600 as an interest payment.
- Paid miscellaneous expenses of $1,800.
a. Prepare journal entries for each transaction.
b. Prepare a cash T-account, and compute Small”s cash balance as of the end of January. Assume a beginning balance of $5,000.
c. Prepare a statement of cash flows for the month of January.