Required How each of the following events or series of event

Required How each of the following events or series of events and the related adjusting entry will affect the amount net income and the amount of cash flow from operating activities reported on the year-end financial statements. Identify the direction of change (increase, decrease, or NA) and the amount of the change Organize your answers according to the following table. The first event is recorded as an example. If an event does not have a related adjusting entry, record only the effects of the event. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.) a. Acquired $49,500 cash from the issue of common stock b. Earned $11,500 of revenue on account. Collected $10,350 cash from accounts receivable c. Paid $2,300 cash on October 1 to purchase a one-year insurance policy d. Collected $9,400 in advance for services to be performed in the future. The contract called for services to start on August 1 and to continue for one year. e. Accrued salaries amounting to $4,600. f. Sold land that cost $17,200 for $17,200 cash g. Provided services for $7,900 cash h. Purchased $1,050 of supplies on account. Paid $700 cash on accounts payable. The ending balance in the Supplies account, after adjustment, was $200 i. Paid cash for other operating expenses of $1,400. Cash Flows from Operating Activities Direction of Amount of Net Income Event Direction of Amount of Change Change Change Change a. NA 0 NA 9

Solution

Answers

Transaction no.

Revenues:

b.

Earned

$        11,500

d. [$ 9400 x 5month/12months]

Earned

$          3,917

g.

Earned

$          7,900

A

Total

$        23,317

Expenses:

c. [$2300 x 3months/12months]

Insurance expense

$              575

e.

Salaries expenses

$          4,600

f.

Gain (loss ) on sale of land

$                 -  

h. [$1050 beginning stock - $200 ending stock]

Supplies expense

$              850

i.

Other operating expense

$          1,400

B

Total

$          7,425

C=A - B

Net Income Increased by

$        15,892

Transaction no.

Cash Flows from Operating Activities:

b.

Cash collected

$              10,350

c.

Paid for Insurance

$              (2,300)

d.

Cash collected in Advance

$                9,400

g.

Services for cash

$                7,900

h.

Paid for Supplies

$                 (700)

Paid for Operating expenses

$              (1,400)

Net Cash Flows from Operating Activities

$              23,250

Cash flows from Investing Activities:

f.

Land sold

$              17,200

Cash Flows from Financing activities

a.

Common Stock

$              49,500

Event

Net Income

Cash Flows from Operating Activities

Direction

Amount of change

Direction

Amount of change

a.

NA

$                 -  

NA

$                    -  

b.

Increase

$        11,500

Increase

$          10,350

c.

Decrease

$              575

Decrease

$             2,300

d.

Increase

$          3,917

Increase

$             9,400

e.

Decrease

$          4,600

NA

$                    -  

f.

NA

$                 -  

NA

$                    -  

g.

Increase

$          7,900

Increase

$             7,900

h.

Decrease

$              850

Decrease

$                700

i

Decrease

$          1,400

Decrease

$             1,400

[for understanding]

Net Increase/(Decrease)

$        15,892 [matches with amount calculated in ‘workings’]

Net Increase/(Decrease)

$          23,250 [matches with amount calculated in ‘workings’]

Transaction no.	Revenues:
b.	Earned	$        11,500
d. [$ 9400 x 5month/12months]	Earned	$          3,917
g.	Earned	$          7,900
A	Total	$        23,317
	Expenses:
c. [$2300 x 3months/12months]	Insurance expense	$              575
e.	Salaries expenses	$          4,600
f.	Gain (loss ) on sale of land	$                 -
h. [$1050 beginning stock - $200 ending stock]	Supplies expense	$              850
i.	Other operating expense	$          1,400
B	Total	$          7,425
C=A - B	Net Income Increased by	$        15,892