Consider the effects of theindependent transactions, a through f, on a company’s balancesheet, income...
Consider the effects of the independent transactions, a through f, on a company’s balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity.
Owner invests cash into the business in exchange for stock.
Recognizes account receivable for services provided.
Pays account payable with cash.
Buys land with cash.
Buys plant equipment on credit.
Borrows money by taking out loan at bank.
Complete the table below to explain the effects and financial statement linkages. Use “+” to indicate the account increases and “–” to indicate the account decreases.
a. | b. | c. | d. | e. | f. | |
Balance sheet | ||||||
Cash | ||||||
Noncash assets | ||||||
Total liabilities | ||||||
Contributed capital | ||||||
Retained earnings | ||||||
Other equity | ||||||
Statement of cash flows | ||||||
Operating cash flow | ||||||
Investing cash flow | ||||||
Financing cash flow | ||||||
Income statement | ||||||
Revenues | ||||||
Expenses | ||||||
Net earnings | ||||||
Statement of stockholders’ equity | ||||||
Contributed capital | ||||||
Retained earnings | ||||||
Homework Answers
Requirement, as asked
|
a. |
b. |
c. |
d. |
e. |
f. |
|
|
Balance sheet |
+ [plus] Loan received |
|||||
|
Cash |
+ [plus] |
- [minus] |
- [minus] |
|||
|
Noncash assets |
+ [plus] Accounts receivables |
+ [plus] Land purchased |
+ [plus] Equipment purchased |
|||
|
Total liabilities |
- [minus] Accounts payable paid |
+ [plus] |
+ [plus] Loan |
|||
|
Contributed capital |
+ [plus] |
|||||
|
Retained earnings |
||||||
|
Other equity |
||||||
|
Statement of cash flows |
||||||
|
Operating cash flow |
- [minus] |
|||||
|
Investing cash flow |
- [minus] |
- [minus] |
||||
|
Financing cash flow |
+ [plus] |
+ [plus] |
||||
|
Income statement |
||||||
|
Revenues |
+ [plus] Service revenue |
|||||
|
Expenses |
||||||
|
Net earnings |
||||||
|
Statement of stockholders’ equity |
||||||
|
Contributed capital |
+ [plus] |
|||||
|
Retained earnings |
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