. Instructions Prepare a cash flow statement for the following company Pearce Information Processing Company provides software support services for its clients. Pearce uses at support staff of five (5) people who each average 160 hours of work a month. The following table sets out information developed by the budget officer: November December January February March Client billings (sales) 25,000 35,000 25,000 20,000 40,000 Selling and administrative expenses 12,000 13,000 12,000 11,000 12,500 Operating supplies purchased 2,500 3,500 2,500 2,500 4,000 Overhead 3,200 3,500 3,000 2,500 3,500 The company has a bank loan of $12,000 at a 12% interest annual rate. Interest is paid monthly, and $2,000 of the principal of the loan is due on February 28. Income taxes of $4,550 are due and payable on March 15. The companys five employees earn $8.50 an hour. For the items included in the table above assume the following conditions: Client billings (sales): 60% are cash sales collected during the month of sale 30% are collected in the first month following the sale 10% are collected in the second month following the sale Operating supplies (expenses): Paid for in the month purchased Selling and administrative and overhead expenses: Paid in the month following the costs incurrence The cash balance on December 31 is expected to be $13,840 Required: Prepare a monthly cash budget for the three-month period ending March 31 (the months of January, February and March).

Please Help! I do not understand how to prepare cash flow statements. Thank you.