The following transactions occurred during February 2013 for the Quest Company. The company owns and operates a wholesale warehouse.
1.Issued 35,000 shares of capital stock in exchange for $350,000 in cash.
2.Purchased equipment at a cost of $50,000. $10,000 cash was paid and a note payable was signed for the balance owed.
3.Purchased inventory on account at a cost of $85,000. The company uses the perpetual inventory system.
4.Credit sales for the month totaled $132,000. The cost of the goods sold was $77,000.
5.Paid $5,500 in rent on the warehouse building for the month of March.
6.Paid $7,000 to an insurance company for fire and liability insurance for a one-year period beginning March 1, 2013.
7.Paid $72,000 on account for the merchandise purchased in 3.
8.Collected $43,000 from customers on account.
9.Recorded depreciation expense of $1,200 for the month on the equipment.
Required:
Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was $40,000.