Question

Required How each of the following events or series of events and the related adjusting entry will affect the amount of 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 Paid $2.200 cash on October 1 to purchase a one-year insurance policy b. Purchased $1000 of supplies on account, Paid $900 cash on accounts payable. The ending balance in the Supplies account, after adjustment was $250 Provided services for $7900 cash d. Collected 510,700 in advance for services to be performed in the future. The contract called for services to start on May 1 and to continue for one year e. Accrued salaries amounting to $4.900 Sold and that cost $17.400 for $17400 cash Acquced $47500 cash from the issue of common stock h Earned $13 300 of revenue on account Collected $11.970 cash from accounts receivable 1 Paid cash operating expenses of S1.800

Answer 1

SOLUTION: Cash flows Net income Working Direction of Amount of change Direction of Amount of change change change NA NA NA 2200 Adj. 2200*3/12 Decrease 550 NA NA NA NA Decrease 900 Adj. Decrease 750 NA NA 7900 Increase 7900 Increase Adj. 10,700 NA NA Increase Adj. 10,700*8/12 Increase 7133 NA NA Decrease 4900 NA NA Adj. Sale of land is a part of Investing activities NA NA NA NA Adj. Cash recceived from Common Stock is part of the Financing activities NA NA NA NA Adj. 13,300 Increase Increase 11,970 Adj. 1,800 Decrease 1,800 Decrease Adj.