Use the stated period and fictional dollars. In this simplified direct-method model, customer collections and cash paid for wages or rent are operating; cash equipment purchases or sales are investing; owner contributions, borrowing, principal repayments and owner withdrawals are financing. Record inflows as positive and outflows as negative. Add the three net flows to opening cash. Unpaid bills are not cash receipts.
Worked example
Separate example: opening cash 60; customer cash 45 and rent paid 15 give operating +30. Buying equipment for 25 gives investing -25. An owner contribution of 10 gives financing +10. Net change = 30 - 25 + 10 = +15; ending cash = 60 + 15 = 75, not 15.
Paper Lantern Workshop / July 1-31
Opening cash: 80 fictional dollars. July cash events: collect 150 from customers (including 20 owed for earlier services); pay wages 50 and rent 20; buy equipment for 90; receive owner contribution 25; borrow 40; repay loan principal 15; owner withdraws 10. Separately, complete and bill 30 of services that remain entirely unpaid. These are all cash movements; there are no taxes, interest, dividends, cash equivalents or currency changes. Equipment is for use, not resale stock. Use only these invented records.