Avalos Corporation is preparing its annual financial statements at December 31 of the current year. Listed here are the items on its statement of cash flows presented in alphabetical order. Parentheses indicate that a listed amount should be subtracted on the cash flow statement. The beginning balance in cash was $30,000 and the ending balance was $70,700.

Decrease in accounts payable (4,989)

Decrease in inventory 15,552

Increase in accounts receivable (389)

Land purchased (36,389)

Net income 36,452

New delivery truck purchased for cash (9,989)

Stock issued for cash 40,452

Prepare the current year statement of cash flows for Avalos Corporation. (Cash outflows should be indicated with negative amounts.)

Solution and Explanation:

From Operating activities  

Net income36452  

Add: Decrease in inventory15552  

Less: Increase in accounts receivable389  

Less: Decrease in accounts payable4989  

From Operating activities                                                      46626                                                                          

From Investing actvities  

Land purchased-36389  

Delivery truck purchased-9989  

From Investing actvities                                                        -46378                                                                                    

From FInancing activites      

Add: Stock issued for cash40452  

From FInancing activites                                            40452                                          

Net change in cash  40700

Opening cash balance  30000

Clsoing cash balance  70700

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since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.