Apps D Freedom FM106 Home Decorators L sah atore Ferragamw

: Apps D Freedom FM-106 | Home Decorators.. L sah atore Ferragam..wnlamsburg Roal-, Watch A Night Accounts Payable $ 158,000 28,000 Cash (balance on September 1, 2014) Cash (balance on August 31, 2015) Common Stock Notes Payable Office Expenses Prepaid Rent Retained Earnings (beginning) Salaries and Wages Expense Salaries and Wages Payable Sales Revenue 183,000 45000 595.000 Uiies Expense Other cash flow information: S 43,000 57,000 Cash paid to purchase equipment Cash pald to suppliers and employees Cash recelved from customers Cash recelved from borrowings 168,000 1726,000 Dividends pald in cash 11000 0,3 7 8 2

Solution

1a. Cash flow statement shows a positive change of $6,000. It can also be verified from ending and beginning cash balance. Change = 94,000-88,000 = $6,000.

Thus cash balance increased by $6,000.

1b. My information source is statement of cash flows that I have prepared and provided here.

2a. For this first I will have to compute net income.

Salaries and wages expenses = $1,020,000 (as provided). Now a 4% increase in salary = 4% of 1,020,000 = $40,800. Thus net income will fall by $40,800 and will become 108,000-40,800 = $67,200

Thus net income will decrease by $40,800 and will be $67,200 after 4% pay increase.

2b. My information source is \"income statement\".

Cash flow from operating activities
Cash received from customers	1,726,000.00
Cash paid to suppliers and employees	(1,532,000.00)
Cash provided by operating activities		194,000.00
Cash flow from investing activities
Cash paid to purchase equipment	(57,000.00)
Cash used in investing activities		(57,000.00)
Cash flow from financing activities
Additional investments by stockholders	43,000.00
Cash received from borrowings	5,000.00
Repayment of borrowings	(168,000.00)
Dividends paid in cash	(11,000.00)
Cash used in financing activities		(131,000.00)
Change in cash		6,000.00
Cash at August 31, 2015		94,000.00
Cash at September 1, 2014		88,000.00