Question

For each of the following transactions, identify which financial statement(s) is impacted in the current period. It may be that multiple financial statements are impacted, it may be that no financial statements are impacted. (BS – Balance Sheet, IS – Income Statement, CF – Cash Flow Statement, or none)

Transaction

1. Common Stock is sold to shareholders to establish company.

2. Employees earn salary for the week but are not yet paid.

3. Cash is collected from customer based on a sale today.

4. Cash is collected from customer based on prior period sale.

5. Company is fined which is payable in next period.

6. Salaries are paid which were earned in previous period.

7. A customer order that has been back-logged is finally shipped.

8. Company buys a new manufacturing plant on last day of period.

9. Casino (the company) wins a hand of black-jack.

10. This week’s food delivery is received at a restaurant.

11. Vendors are paid.

12. Interest expense is calculated on outstanding debt.

13. Company records depreciation expense for period.

14. Repairman fixes broken computer and will bill next period.

15. Department orders a product but it is not received.

Answer 1

	BS-Balance Sheet, IS-Income Statement,CF-Cash Flow
		Impacted	Remarks
	1. Common Stock is sold to shareholders to establish company.	BS,CF	Cash…..Debit, Common Stock ….Credit (Both Accounts are Balance sheet account. Cash is received so CF is impacted
	2. Employees earn salary for the week but are not yet paid.	BS,IS	Salaries Expense….Debit, Saalaries Payable …Credit.Salaries expense is in Income Statement and Salaries Payable is in Balance Sheet. No cash transacted
	3. Cash is collected from customer based on a sale today.	BS,IS,CF	Cash….Debit, Sales Recvenue…Credit (Cash is Balance sheet account and Sales Revenue Income Account
	4. Cash is collected from customer based on prior period sale.	BS,CF	Cash….Debit, Account receivable…Credit (Both areBalance sheet accounts)
	5. Company is fined which is payable in next period.	BS,IS	Fine expense…Debit, Fines Payable..Credit(Fine expense is Income account and Fines Payable is in Balance sheet)
	6. Salaries are paid which were earned in previous period.	BS,CF	Salaries Payable…..Debit, Cash…Credit (Both are Balance Sheet accounts)
	7. A customer order that has been back-logged is finally shipped.	BS,IS	Accounts Receivable…Debit, Sales….Credit
	8. Company buys a new manufacturing plant on last day of period.	BS,CF	Plant account…Debit, Cash Credit
	9. Casino (the company) wins a hand of black-jack.	BS,IS,CF	Cash….Debit, Income….Credit
	10. This week’s food delivery is received at a restaurant.	BS	Food Inventory…Debit, Accounts Payable….Credit
	11. Vendors are paid.	BS,CF	Accounts Payable…Debit, Cash ….Credit
	12. Interest expense is calculated on outstanding debt.	BS,IS	Interest Expense…..Debit, Interest Payable ….Credit
	13. Company records depreciation expense for period.	BS,IS	Depreciation Expense…Debit, Accumulated Depreciation…Credit
	14. Repairman fixes broken computer and will bill next period.	None	There is no accounting entry till the bill is received
	15. Department orders a product but it is not received.	None	There is no accounting entry till the goods are received