Question

Cordell Inc. experienced the following events in Year 1, its first year of operation:

1. Received $45,000 cash from the issue of common stock.
2. Performed services on account for $73,000.
3. Paid a $4,500 cash dividend to the stockholders.
4. Collected $51,000 of the accounts receivable.
5. Paid $45,000 cash for other operating expenses.
6. Performed services for $11,000 cash.
7. Recognized $1,500 of accrued utilities expense at the end of the year.

Required
a. & c. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, IA for investing activity and NA to indicate the element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)

Event Revenue Expense Statement of Cash Flows 1. 2. 3. 4. 5. 6. 7

Answer 1

Expenses Cashflow NA 45000 NA -4500 51000 4500045000 11000 Revenue Received $45,000 cash from the issue of common stock Performed services on account for $73,000 Paid a $4,500 cash dividend to the stockholders Collected Paid $45,000 cash for other operating expenses Performed services for $11,000 cash Recognized $1,500 of accrued utilities expense at the end of the vea NA 73000 NA NA FA NA FA OA OA OA NA NA NA $51,000 of the accounts receivable 110000 NA NA 1500 NA NA Particulars Remark Received $45,000 cash from the issue of common stock Performed services on account for $73,000 Paid a $4,500 cash dividend to the stockholders Collected Paid $45,000 cash for other operating expenses Performed services for $11,000 cash Recognized $1,500 of accrued utilities expense at the end of the year No effect on revenue & expenses Revnue gets increase. Assuming service perform in credit. Hence no cash received No effect on revenue & expenses. Cash reduced by 4500 No effect on revenue & expenses. Cash increase by 51000 Expenses get increase. And cash gets reduced Revnue recorded and cash increase $51,000 of the accounts receivable expenses recorded but no effect on cash

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