A summary of cash flows for Absolute Consulting Group for the year ended July 31, 2012, is shown below.

Cash receipts:

Cash received from customers$187,500

Cash received from issuing additional capital stock 40,000

Cash payments:

Cash paid for operating expenses 127,350

Cash paid for land 30,000

Cash paid for dividends 5,000

The cash balance as of August 1, 2011, was $27,100. Prepare a statement of cash flows for Absolute Consulting Group for the year ended July 31, 2012.

1. Prepare a balance sheet as of December 31, 2012.

2. What item appears on both the retained earnings statement and the balance sheet?

ABSOLUTE CONSULTING GROUP

Statement of Cash Flows

For the Year Ended July 31, 2012

Cash flows from operating activities:

      Cash received from customers.....................................................          $187,500

      Deduct cash payments for operating expenses............................             127,350

      Net cash flows from operating activities.....................................                                  $  60,150

Cash flows from investing activities:

      Cash payments for purchase of land............................................                                     (30,000)

Cash flows from financing activities:

      Cash received from issuing additional capital stock....................         $    40,000

      Deduct cash dividends................................................................                 5,000

      Net cash flows from financing activities.....................................                                      35,000

Net increase in cash during year........................................................                                  $  65,150

Cash as of August 1, 2011.................................................................                                      27,100

Cash as of July 31, 2012....................................................................                                  $  92,250