Question

Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a “+” and the dollar amount in the column or columns. For decreases, place a “−” and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with the dollar amounts. The first transaction is completed as an example.

Required:
a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income.
b. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Answer 1

		Balance Sheet			Income statement	Statement of cash flow
	Transaction	Total assets	Total liabilities	Total equity	Net income	Operating activities	Investing activities	Financing activities
1.	Owner invests $900 Cash in business in exchange for stock	+900		+900				+900
2.	Receives $700 Cash for service provided	+700		+700	+700	+700
3	Pays $500 cash for employee wages	-500		-500	-500	-500
4	Incurs $100 legal Cost on credit		+100	-100	-100
5	Purchases $200 of supplies on credit	+$200	+$200
6	Buys equipment for $300 Cash	+300 -300					-300
7	pays $200 on account payable	-200	-200			-200
8	Provides $400 services on credit	+400		+400	+400
9	Pays $50 cash for dividend	-50		-50				-50
10	Collects $400 cash on account receivable	+400 -400				+400