Colorado Corporation was organized on January 1, 2012, with the investment of $2

Question

Colorado Corporation was organized on January 1, 2012, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory note for the balance. Colorado signed a five-year, $60,000 promissory note at a local bank during 2012 and received cash in the same amount. During its first year, Colorado collected $93,970 from its customers. It paid $65,600 for inventory, $20,400 in salaries and wages, and another $3,100 in taxes. Colorado paid $5,600 in cash dividends. Q:Prepare a statement of cash flows for the year ended December 31, 2012. If an amount is zero, enter "0". Use the minus sign to indicate cash out flows and a decrease in cash or cash payments

Explanation / Answer

Cash from stock holders- Financing activity- inflow $250,000 Payment for office building - Investing activity - outflow $210,000 Cash from bank promissory note - Financing activity - inflow $60,000 Collection from customers - Operating activity - inflow $93,970 Payment for inventory - Operating activity - outflow $65,600 Payment for salaries & wages - Operating activity - outflow $20,400 Payment for taxes - Operating activity- outflow - $3,100 Cash dividends paid - Financing activity - outflow - $5,600

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