Teresa Ramirez and Lenny Traylor are examining the following statement of cash flows for Pina Clothing Store’s first year of operations. PINA CLOTHING STORE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED...


Teresa Ramirez and Lenny Traylor are examining the following statement of cash flows for Pina Clothing Store’s first year of operations.

























































































































































PINA CLOTHING STORE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 2020
Sources of cash
From sales of merchandise$380,000
From sale of common stock379,000
From sale of investment124,000
From depreciation77,000
From issuance of note for truck28,000
From interest on investments7,900
  Total sources of cash995,900
Uses of cash
For purchase of fixtures and equipment328,000
For merchandise purchased for resale251,000
For operating expenses (including depreciation)168,500
For purchase of investment94,000
For purchase of truck by issuance of note28,000
For purchase of treasury stock11,000
For interest on note2,800
  Total uses of cash883,300
Net Increase in Cash$112,600


Teresa claims that Pina’s statement of cash flows is an excellent portrayal of a superb first year, with cash increasing $112,600. Lenny replies that it was not a superb first year—that the year was an operating failure, the statement was incorrectly presented, and $112,600 is not the actual increase in cash.





Initial post:



Answer the following questions.



  1. With whom do you agree, Teresa or Lenny?  Explain your position.

  2. Is the statement of cash flows in the correct format?

    1. What are cash flows from Operating Activities?

    2. What are cash flows from Investing Activities?

    3. What are cash flows from Financing Activities?






Jun 09, 2022
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