ACTIVITY

Your friend has been working for about a year since graduating from university. He has come to you for advice on his savings and spending habits. You have accumulated the following information on his savings and spending that has occurred over the past year: Saving/Spending Amount $ Salary from full-time employment, net of income tax 58,000 Rent, hydro, internet, phone bills paid 25,500 Car expenses paid 5,300 Credit card debt at the start of the year 1,280 Food and household expenses paid 7,000 Entertainment and miscellaneous expenses paid 4,130 Credit card debt at the end of the year 1,050 Line of credit at the start of the year 4,800 Line of credit at the end of the year 5,800 Purchase of car 30,000 Car loan at the end of the year 24,000 Cash account at the beginning of the year 1,120 Cash received from disposal of video game console 150 Cash received from disposal of old TV 120 Cash account at the end of the year 1,950 Purchase of investments 6,000 Student loan at the beginning of the year 12,430 Student loan at the end of the year 10,800 Purchase of new TV 600 Purchase of printer 250 Interest expense paid 1,800 Instructions

Prepare a statement of cash flow for your friend from information provided above using the direct method. Can you provide some advice to your friend on how he could improve his cash flow strategies, such as managing debt levels and terms of payment?